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PSC Register – Is Your Company Ready?
From 6 April 2016, the majority of companies and LLPs in the UK will be required to create and maintain a register of “persons with significant control” (“PSCs”) over them and to make that register public at Companies House from 30 June 2016. This register is known as the PSC Register and it will be an additional statutory register that companies and LLPs are required to keep in order to increase transparency around who owns UK companies and LLPs. Companies and LLPs should therefore consider carefully any person(s) with “significant control” over them in order to make the appropriate entries in their PSC Register.
Which companies and LLPs must keep a PSC Register?
The new duty applies to all UK incorporated companies and LLPs other than those which are considered subject to their own disclosure requirements, such as a DTR5 issuer and companies with voting shares admitted to trading on a regulated stock market in an EEA state other than the UK.
Who is a person with significant control (PSC)?
An individual will qualify as a PSC if he meets one or more of the five conditions set out below. Where a legal entity (rather than an individual) meets one or more of the below conditions, and that legal entity is required to maintain its own PSC Register (or is exempt from doing so) then that legal entity will be a “relevant legal entity” for the company or LLP and will need to be entered onto the PSC Register as a registrable relevant legal entity (“registrable RLE”).
What steps must be taken by the Company or LLP to identify PSCs?
An affected company or LLP must take reasonable steps to identify any individuals or relevant legal entities that might be a PSC of the company or LLP and give notice to anyone it knows or has reasonable cause to believe (i) is a PSC, or (ii) knows the identity of a PSC. PSCs or those who might know about a PSC are under a legal obligation to respond to requests for information.
Below is a table setting out the conditions and guidance as to what should be considered in order to decide if an individual or relevant legal entity satisfies any of the conditions.
| Condition | Things to consider and/or review | |
|---|---|---|
| 1 | Directly or indirectly (i) owns more than 25% of the company’s shares, or, if a company does not have a share capital, (ii) has the right to share in more than 25% of the company’s capital or profits, or in the case of an LLP, (iii) has the right to share in more than 25% of the LLP’s surplus assets on a winding up. | Review the register of members, the articles of association, LLP agreement and statement of capital to identify anyone holding over 25%. |
| 2 | Directly or indirectly has more than 25% of the company’s or LLP’s voting rights. | As well as reviewing the register of members and articles to identify anyone with over 25% of the voting rights, check any shareholder or LLP agreements which might result in voting rights over 25% and also consider whether any voting patterns might suggest some shareholders/members tend to act together. |
| 3 | Directly or indirectly has the right to appoint or remove the majority of the company’s board of directors or the LLP’s management. | Review the provisions of the articles (and other agreements) which concern the appointment and removal of directors. |
| 4 | Otherwise has the right to exercise, or actually exercises, significant influence or control over the company or LLP. | Here, you should think about whether anyone else who does not meet conditions 1-3 above has the right to exercise, or actually exercises, significant influence or control over the running of the company or LLP. |
| 5 | Holds the right to exercise, or actually exercises, significant influence or control over the activities of the trustees of a trust or members of a firm which is not a legal entity, which would themselves satisfy any of the first four conditions if they were individuals in relation to a company or a LLP. | If anyone who meets one of the first 4 conditions is a trust or firm, then consider whether anyone has significant influence or control over that trust or firm. This may be revealed by an inspection of any trust deed or partnership agreement. |
When identified, the company or LLP must contact the individuals or relevant legal entities (or others who may know them) to confirm if they meet the conditions and if they do, obtain the necessary information to go onto the register. The company or LLP must then put the information onto its PSC Register from 6 April 2016 and file the information at Companies House from 30 June 2016.
What information must go onto the PSC Register?
For individuals, their name, nationality, date of birth, usual residential address, service address, country or state of usual residence, and whether there are any restrictions on using or disclosing that individual’s PSC information. It is important to note that this information must not be included on the PSC Register unless it has been confirmed by the individual.
For registrable RLEs, its corporate or firm name, registered or principal office, legal form of the entity, governing law, register of other companies or entities in which it is entered and registration number (if any).
In all cases, the PSC Register must contain details of the date on which a person first became a registrable person or registrable RLE and the nature of his or its control.
What if the company or LLP does not have any PSCs?
If the company or LLP does not have any PSCs, it should enter the following statement on its PSC Register: “The [company/LLP] knows or has reasonable cause to believe that there is no registrable person or registrable relevant legal entity in relation to the [company/LLP].”
What next?
The information on the PSC Register must be kept up to date on the company’s own PSC Register and confirmed or corrected every time the company submits its Confirmation Statement (the new name for an Annual Return).
This note is intended to be for information purposes only and does not constitute legal advice. For advice on how the new legislation affects your company, please contact a member of our Corporate team.
