All UK companies will very soon be subject to significant new rules on transparency designed to combat tax evasion, money laundering and terrorist financing, as well as boosting trust in the country and promoting it as a sound business and investment destination.
Unlisted companies registered under the UK Companies Acts have until April 2016 to implement a ‘Persons with Significant Control Register’ PSC Register, but the time to prepare is now.
What is the PSC Register?
The individuals who control a company are often different from those listed on the company’s register of shareholders and in many cases the PSC register will look quite different than the shareholder register.
At present companies record only the immediate, legal owners of their shares. In future, they will have to identify persons who ultimately have significant control of the company. The requirement is to ‘take reasonable steps to identify’ every person who has, directly or indirectly, significant control over the company.
There is a new requirement from April 2016 for all companies to prepare and keep information on their beneficial owners in a PSC Register including individuals and, in some cases, companies. From June 2016, a company must send its PSC Register information annually to Companies House with its ‘Annual Confirmation’ statement. Companies House will therefore hold PSC information on all UK companies by April 2017. Also from June 2016, when applying to register a new company, a ‘statement of initial significant control’ must be filed. A company’s PSC register will be open to public inspection.
The requirement will ensure that persons having control of more than 25% of the company or controlling more than 25% of the voting rights of a company are recorded at Companies House. It also covers persons that have the right to exercise, or actually exercises, ‘significant influence or control over the company’.
A significant controller will also be required to notify the company of his interest (or confirm his interest to the company). Breach is an offence and may also result in loss of rights in the company associated with the interest.
‘Required particulars’ must be included for each registrable person with significant control. It will include name, service address and/or usual residential address, nationality, country of residence, date of birth and nature of the significant control. This information will be publicly available at Companies House. You may choose a service address instead of your residential address though you may find your residential address is already filed at Companies House as you are also a director of your company.
What do to next
Companies must not only collate the relevant information required to compile a register, but also ensure that the records are properly maintained and updated as changes occur.
Companies should not hesitate in preparing and putting in place the processes they need to comply. They must also keep all records thoroughly up to date moving forward.
A company that is subject to the PSC Register must:
take reasonable steps to find out any registrable person or registrable relevant legal entity in relation to it
notify any of these people or entities to supply or confirm information
notify others it believes have relevant information to supply or confirm
notify registrable persons or entities if it believes they have ceased to be such or their registrable particulars have changed.
Company officers failing to administer the PSC rules can expect fines and imprisonment. The levels and lengths have yet to be determined.