Changes to the law in the UK under the Small Business, Enterprise and Employment Act 2015 (“the Act”) have meant that from 6th April 2016 companies and LLPs have been required to keep a register of “people with significant control” (“PSC Register”) which lists all individuals and legal entities who have significant control or influence in the company or LLP.

All references to “company” below should be read as applying to LLPs who are also required to keep a PSC Register under The Limited Liability Partnerships (Register of People with Significant Control) Regulations 2016.

The PSC Register was introduced to try and provide more transparency within companies, acting as a deterrent to prevent illegal activity such as tax evasion. UK companies now have a responsibility under the Act to identify people with significant control and keep their PSC Registers up to date, as well as PSC’s themselves having a duty to disclose to the company if they are a PSC.

An individual and/or legal entity (provided the legal entity is subject to its own disclosure requirements*) will be a PSC if they meet one of the conditions below:

1. Holds, directly or indirectly, more than 25% of the company’s shares;

2. Holds, directly or indirectly more than 25% of the company’s voting rights;

3. Has the power, directly or indirectly, to appoint or remove a majority board;

4. Has the right to exercise, or exercises significant influence and control over the Company; or

5. Has the right to exercise, or actually exercises, significant control or influence over the activities of a trust or firm that does not have legal personality, where the trustees or members of that trust or firm meet any of conditions one to four in relation to the company.

Members and shareholders of the company are under an obligation to assist in these investigations until either a PSC is identified, or it has been discovered that there are no PSCs. If no PSCs are identified after reasonable investigations the company has to make a statement on the PSC Register to this effect – the PSC Register cannot be blank.

Once a PSC has been discovered, the company must send notice to them, requesting them to give, or confirm the details to be written in the PSC Register in line with conditions 1 to 5 as set out above. In addition to holding the PSC Register in their company books, companies must also provide this information on the annual confirmation statement (which replaces the annual return and will be filed at Companies House). The details required are name, date of becoming a PSC, service address, nationality, country of residence, residential address and date of birth.

Although the residential address has to be given on the confirmation statement, this will not be made public on Companies House provided that:

1. the PSC’s listed service address is different from their residential address; and

2. the company does not hold its registers centrally with Companies House.

In addition, only the month and year of the PSC’s date of birth will be made public on Companies House provided the company does not hold its registers centrally with Companies House, in which case the full date of birth will be provided.

If companies do not comply with the new rules under the Act, the company, its directors, secretary and PSCs can face criminal penalties.

As the shareholdings of companies and particular PSC Register requirements will differ from company to company, you may appreciate a discussion prior to completing the PSC Register.

If you wish us to assist with the preparation of your PSC Register and of notices to PSCs, please do get in touch.

*For example, having to disclose information to Companies House (or another Country’s central companies registry, provided that the registry promotes transparency).

If you wish us to assist with the preparation of your PSC Register please get in touch with Chris Taylor at christaylor@eatonsmith.co.uk or on 01484 821 300.

The information contained in this article is for information only, is not exhaustive and does not constitute legal advice. You should take specific legal advice before acting on any of the issues raised in this article.