From 6th April 2016, UK corporate bodies (including limited companies and limited liability partnerships) are obliged to create, maintain and keep available for inspection a Register of People with Significant Control (PSC Register).
The PSC Register must set-out people who have significant influence and control of the company and contain certain prescribed information – effectively their name and address and how they exercise influence or control. Details are in the BIS short form guidance here. If the identity of a person with significant control is unclear, the officers of the company must take reasonable steps to find out who they are.
By way of overview, a person will be deemed to have significant control over a company if he or she:
- owns more than 25% of the shares in the company (in a company which does not have shares this requirement is replaced by having rights to more than 25% of the income);
- holds more than 25% of the voting rights in the company;
- has the right to appoint the majority of the board; or
- has legal rights to or in fact does exercise ‘significant influence or control’ over the company.
The above tests apply whether the right is held directly or indirectly (for example via an intermediate company or companies), or with others who have agreed to hold the rights as a block, and also catch any person who can or does exercise significant influence or control over the activities of a trust or a firm which would meet such test if treated as an individual.
In line with these changes, the Annual Return is being replaced by a Confirmation Statement containing the PSC information from 30 June 2016. The Confirmation Statement must be filed annually but can be filed at any point up to and including its annual due date (which will initially be the same as a company’s current annual return date).
In most circumstances (unless you have material shareholdings held by a trust or nominee, someone in the background who might be at risk of being a shadow director, or a very restrictive shareholders’ agreement in place) the people on the PSC register will be the same as those individuals currently shown on the return as holding more than 25% of the shares of the company.
If the company is part of a group, so long as the company’s immediate parent is itself a company that is obliged to keep a PSC register, there is no need to identify the ultimate PSCs of that parent company– you just record the immediate parent company as a Relevant Legal Entity. However if the immediate parent company is not obliged to keep its own PSC register (for example it’s incorporated in a non EU offshore jurisdiction), then you will need to record the ultimate PSCs.
These measures have been put in place to assist third parties to identify the true ownership structure of corporate bodies in an attempt to increase transparency.
For more information about Andy and his work, please visit https://www.dbf-law.co.uk/our-people/Andy-McNish/