With effect from April 2016, most companies in the UK will need to start keeping a register of people with “significant control” over the company, the “PSC register”, although this information will not need to be made available on the public register at Companies House until June 2016.
The rules apply to all UK companies, except those subject to the disclosure requirements of DTR 5 (e.g. LSE main market and AIM companies) and companies with voting shares admitted to trading on a regulated market in an EEA state (other than the UK) or on certain specified markets in Switzerland, the United States, Japan and Israel. This is because these companies are already required to make details of major shareholdings public. The rules also apply to LLPs and to UK registered Societates Europaeae.
The PSC register will need to include particular information about individuals and relevant legal entities (who would have been a person with significant control if they had been individuals).
Who is a ‘person with significant control’?
Broadly, a person with significant control over a company is defined in the Act as an individual that (either alone or as one of a number of joint holders of the share or right in question) meets one or more of the following conditions:
- the individual holds, directly or indirectly, more than 25 per cent of the shares in the company;
- the individual holds, directly or indirectly, more than 25 per cent of the voting rights in the company;
- the individual holds the right, directly or indirectly, to appoint a majority of the board of directors of the company;
- the individual has the right to exercise or actually exercises a significant influence or control over the company.
Further issued guidance states that “control” means that a person has the power to direct a company’s policies or activities, while “significant influence” enables a person to ensure that a company or trust adopts those policies or activities that he/she wants.
Information to be included on the PSC Register
The information to be included on the PSC Register will:
- for individuals, include details of a PSC’s name, residential address, service address (note that this should not be made publicly available if the register is requested and Companies House will not make this available on the central public register), nationality and date of birth and information about how they have significant control;
- for legal entities, include details of its name, registered office, legal form and law by which it is governed, register of companies in which it is entered and registration number (if applicable) and information about how they have significant control; and
- record whether the percentage of shares/voting rights held by the PSC falls within one of three specified categories being more than 25% up to 50%; more than 50% up to 75%; or 75% or more.
The majority of UK companies, even those with simple shareholding structures will need to comply with these provisions or risk being convicted of a criminal offence. Likewise, shareholders of said companies will need to provide the required information to the company or put themselves at risk of being convicted of related offences. This an obligation to notify the company of relevant changes to the information on the PSC register. LLP’s are also required to keep PSC registers.
This legislation aims to remove the element of secrecy from the use of nominees to hold shares for otherwise undisclosed beneficiaries where the shareholding held by a nominee in respect of any individual is over 25%. It will be a criminal offence to withhold the identity of beneficiaries of shares by a nominee although there may be circumstances for practical purposes where such an arrangement is still required and the beneficiary is happy for his or her details to be published on the register. The criminal offence extends both to the Company if it knowingly submits false or misleading information and with the individual who is the PSC.
Where the number of shares held by a nominee is 25% or less than the overall number of shares issued, there would be no requirement to enter any beneficiary details in the PSC register unless such individual qualified as a PSC under other criteria.
If you are unsure about your duties under this change please contact the Corporate Commercial department at Slater Heelis LLP on 0161 672 1420.