MENUmenu icon
CLOSEclose

1 June 2016

Back

The PSC Register

Posted by: Steven Fruhman

Governments all over the world are very keen to promote transparency and to cut red tape. Often, as you will see from what follows, these two admirable aspirations are incompatible, and the drive for transparency (especially in relation to company and other types of ownership) leads to an increase in red tape (a not wholly unexpected but, nonetheless, unwelcome consequence) rather than a reduction.

So, a worthwhile reform brings an additional layer of bureaucracy and regulation which all corporate business entities (including LLPs and limited partnerships) have to bear.

The Small Business, Enterprise and Employment Act 2015 (the “Act”) is a case in point and illustrates starkly what happens when good intentions collide with the real world of ordinary business people who have to deal with what emerges from the bureaucratic mind.

Among other things (apart from abolishing corporate directors in October 2016 and replacing Annual Returns with the PSC Register), the Act introduced, with effect from 6th April 2016, an obligation on all UK limited companies, limited liability partnerships and limited partnerships, to compile a register of people with significant control (“PSC Register”) on pain of fine or imprisonment for up to 2 years. We set out below the criteria for identifying individuals with significant control (“PSCs”) and what you need to do.

What is ‘Significant Control’?

In order to meet the criteria to be included on the register, an individual or entity must:

  1. own 25% of the company’s voting rights, either directly or indirectly;
  2. be able to appoint or remove a majority of the board of directors, either directly or indirectly;.
  3. have significant influence or control over the company; or;
  4. have significant influence or control over a trust or firm that is not a legal entity and meets the above conditions.

The criteria for LLPs differ slightly and are set out below: here the PSC:

  1. must have rights to more than 25% of surplus assets on a winding up
  2. own 25% of the voting rights
  3. be able to appoint or remove a majority of people involved in management
  4. have significant influence or control over the company
  5. have significant influence or control over a trust or company that meets one of the other conditions.

The Government has produced guidance on the meaning of the term ‘significant influence or control’ which has just been (finally, we hope) updated again, the guidance is not at all easy to understand. There are also detailed rules on shares held jointly, indirect holdings of shares and joint arrangements.

FAQs

A. I am a director of a UK company: what must I do?

UK companies and their directors must take steps to identify PSCs and to confirm their particulars to Companies House by 30 June 2016. Failure to do so is a criminal offence, punishable by imprisonment and/or a fine.

B. I am a shareholder or I think I may be a PSC: what must I do?

If you receive a notice from a company requesting information required by the Act, you must respond to it. You may be committing a criminal offence if you do not. Additionally, the company may impose restrictions on your shares, so that they cannot receive dividends, be voted or be sold or transferred until you have supplied the information requested.

C. Trusts

Where there are trustees at the top of a corporate structure, they should think about whether they will be considered to be PSCs, and whether they also have a duty to disclose the names and details of settlors, trust beneficiaries and any protectors, enforcers and appointors involved.

D. What do you have to do?

  1. Serve notice to each individual or entity with significant control.
  2. Ask for the details required and request their consent to include them in the register.
  3. If it’s a company, you’ll need to get the details of each PSC of that company too.
  4. Compile your register and keep it safely at your premises. You will be obliged to disclose its contents on request, subject to certain conditions.

Need some help?

If this all sounds like a lot of trouble and time take a look at our offer below.

The principles of the PSC Register are apparently straightforward, but the implementation is not quite so easy so let us help you to discharge your statutory obligations and relieve you of this regulatory burden.

What we will do and what we’ll charge

We’ll get your PSC Register completed provided all of your PSCs are co-operative.

We’ll manage it for you – send the notices, collect the data and compile the PSC Register in accordance with the new laws. Then once you have it in place all you need to do is maintain it, or ask us for help if required.

Our fee to assist in this will be approximately £425 plus VAT as long as you have all the documentation required to hand.

If you’re interested or want a complimentary half hour discussion about this or any other matter relating to the legal issues surrounding your business, please contact

Steven Fruhman Email: [email protected]

Back

Steven Fruhman - Consultant

To discuss how glaiysers can assist you contact Steven Fruhman on [email protected] or via 0161 832 4666.

Get in touch today