From 6 April 2016, most UK companies and LLPs will need to keep a ' Register of People with Significant Control'. The rules have been introduced into the Companies Act 2006 ('Act'). They aim to look through nominee and trust arrangements and holdings of shares by offshore entities to determine who really controls an entity. A company's register will be publicly accessible and the information on it must be reported annually to Companies House.
Who is a person with significant control ('PSC')?
Anyone who meets at least one of these five conditions:
- directly or indirectly holds more than 25% of a company's shares
- directly or indirectly holds more than 25% of a company's voting rights
- directly or indirectly holds the right to appoint or remove a majority of a company's directors
- otherwise has the right to exercise, or actually exercises, significant influence or control over a company; or
- is a person having the right to exercise, or actually exercises, significant influence or control over a trust or partnership, where the trustees of the trust or the members of the partnership meet any of the other specified conditions, or would do so if they were individuals.
The UK government has issued guidance as to the meaning of 'significant influence or control'. There are also detailed rules on shares held jointly, indirect holdings of shares and joint arrangements.
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. Failure to do so is a criminal offence, punishable by imprisonment and/or a fine.
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.
Where there are trustees at the top of a corporate structures, they should consider 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.
Which entities are exempt from these obligations?
Only companies whose shares are listed on certain specified exchanges in the UK, EEA, USA, Japan and Israel and companies which are subject to Chapter 5 of the Financial Conduct Authority's Disclosure and Transparency Rules.
Where can I learn more?
For further information on the PSC Register, please get in touch with your usual Withers contact or any of the contacts listed at the bottom of this page.