From 6 April 2016 most UK companies will be required to keep a public register (PSC Register) of individuals and entities who have “significant control” over the company. From 30 June 2016 the PSC Register will have to be publicly disclosed to Companies House at the same time as the company submits its annual return (now called a ‘Confirmation Statement’).
This will particularly affect shareholders who hold their shares in companies through nominee or trust arrangements, as they may now find themselves disclosed on the public register.
Which companies does this apply to?
The following entities (whether already in existence or formed after 6 April 2016) will need to maintain a PSC Register:
- Private companies limited by shares
- Private companies limited by guarantee
- Most public limited companies
- Limited liability partnerships
- Unlimited companies; and
- Societates Europaeae
However, the following entities are currently exempt from this requirement:
- Companies that are subject to Chapter 5 of the Financial Conduct Authority’s Disclosure and Transparency Rules
- Companies with voting shares admitted to trading on a regulated market in the UK or in another European Economic Area state or certain specified markets in Switzerland, the USA, Japan and Israel
- Overseas entities operating but not registered as a company in the UK
- Sole traders
- Limited partnerships; and
- Charitable Incorporated Organisations
What does “significant control” mean?
A person will have “significant control” if he (alone or jointly with others):
- holds, directly or indirectly, more than 25% of the shares or voting rights in the company
- holds the right, directly or indirectly, to appoint or remove a majority of the board of the company; or
- has the right to exercise, or actually exercises, significant influence or control over the company
Ultimate beneficial owners who own shares through nominee or trust arrangements are likely to be caught by the new disclosure requirements as “indirect” holdings covers majority stakes in any legal entity that in turn either:
- holds the share(s) in question; or
- is part of a chain of legal entities:
- each of which has a majority stake in the entity immediately below it in the chain; and
- the last of which holds the share(s) in question.
A person will have a “majority stake” in a company if he:
- holds a majority of the voting rights in the company
- is a member of the company and has the right to appoint or remove a majority of the board of directors of the company
- is a member of the company and controls alone, or pursuant to an agreement with other members, a majority of the voting rights in the company; or
- has the right to exercise, or actually exercises, dominant influence or control over the company
Under the new provisions, obligations are placed upon both the company and those with “significant control” in the company. The company must investigate, obtain and update information on the registrable persons, and those registrable persons must disclose their interests to the company (whether or not any request for disclosure is made of them by the company). Failure to comply with the obligations may result in criminal penalties.
What to do next?
From 6 April 2016 those companies under the duty to maintain the PSC Register will need to:
- Take reasonable steps to identify whether there are any people with significant control over the company
- Write to those people to confirm whether they meet the significant control conditions and if they do, confirm the relevant information to include in the PSC Register
- Put in place a PSC Register and update the relevant details
- Disclose the information in the PSC Register in any Confirmation Statement required to be filed after 30 June 2016; and
- Maintain the PSC Register keeping the information relating to people with significant control up to date
How can we help? We have the expertise to help you navigate through this complex area of law, from helping you to identify people with significant control and writing to shareholders on your behalf, to maintaining the PSC Register.