The requirement to keep a register of people with significant control, or ‘PSC register’, was introduced on 6th April 2016. Since that date, all UK private limited companies, limited liability partnerships (LLPs) and Societas Europaea (SEs) are legally required to maintain a statutory register with information about the people who have significant control or influence over them. Furthermore, from 30th June 2016, companies must submit the information held on their own PSC register to the central public register at Companies House when filing their first annual confirmation statement (previously known as the ‘annual return’).
- The purpose of the PSC register
- Who qualifies as a Person with Significant Control?
- What does “significant control or influence” mean?
- Information to be entered on the PSC register
- Who is responsible for maintaining the PSC register?
- Filing PSC information at Companies House
- Updating your PSC register
- Do I still have to maintain other statutory registers?
- Can I leave the PSC register empty?
- How long do I have to keep PSC information?
- Inspection of PSC register
1. The purpose of the PSC register
The purpose of the register of people with significant control is to improve corporate trust and transparency in the UK by making it clear to enforcement agencies, other businesses and the general public who ultimately owns and controls UK companies.
It is hoped that this new measure will improve corporate behaviour, deter money laundering and help to sanction those who hide their ownership or control of UK companies for the purpose of facilitating illegal activities.
2. Who qualifies as a Person with Significant Control?
A person with significant control (“PSC”) is an individual (person or registrable legal entity) who meets one or more of the following conditions in relation to a company:
- Condition 1: Directly or indirectly holds more than 25% of the company’s issued share capital.
- Condition 2: Directly or indirectly holds more than 25% of the company’s voting rights.
- Condition 3: Directly or indirectly holds the right to appoint or remove a majority of board of directors.
- Condition 4: Has the right to exercise, or actually exercises, significant influence or control of the company, LLP or SE.
- Condition 5: Has the right to exercise, or actually exercises, significant influence or control over the activities of a trust or firm which is not a legal entity, but would itself satisfy any of the first four conditions if it were an individual.
3. What does “significant control or influence” mean?
An individual who has significant control or influence over a company can be a person or legal entity, such as another company or firm. As per some examples provided by Companies House, “control” and “influence” can be exercised in a number of different ways:
- A person directs the activities of a company, trust or firm.
- A person can ensure that a company, trust or firm generally adopts the activities which they desire.
- A person has absolute decision rights over decisions related to the running of the business of the company, for example relating to:
– Adopting or amending the company’s business plan.
– Changing the nature of the company’s business.
– Making any additional borrowing from lenders.
– Appointment or removal of the CEO.
– Establishing or amending any profit-sharing, bonus or other incentive scheme of any nature for directors or employees.
– The grant of options under a share option or other share based incentive scheme.
- A person has absolute veto rights over decisions related to the running of the business of the company, such as adopting or amending the company’s business plan, or making additional borrowing from lenders.
- Where a person holds absolute veto rights over the appointment of the majority of directors, meaning those directors who hold a majority of the voting rights at meetings of the board on all or substantially all matters.
- A person who is not a member of the board of directors but regularly or consistently directs or influences a significant section of the board, or is regularly consulted on board decisions and whose views influence decisions made by the board.
- A company founder who no longer has a significant shareholding in the company they started, but makes recommendations to the other shareholders on how to vote and those recommendations are always or almost always followed.
4. Information to be entered on the PSC register
The information you must obtain, confirm and enter on your company’s own PSC register will depend on whether the PSC is a person or a registrable relevant legal entity (RLE).
If the PSC is a person, you must record the following information about that individual:
- Date of birth
- Country/state of residence
- Service address
- Usual residential address (If the residential address is used as the service address, you do not need to provide it again).
- Date on which the individual became a PSC in the company.
- Which of the five PSC conditions have been met, with quantification of the interest where relevant.
– For conditions 1 and 2 this must include the level of their shares and voting rights, within the following brackets: over 25% up to 50%; more than 50% and less than 75%; 75% or more.
- Any restrictions on the public disclosure of the PSC’s information.
If the PSC is a registrable RLE, you must record the following information about that RLE:
- Registered name.
- Registered office or principal office.
- Legal form and the law by which it is governed.
- Registration number and company register on which the RLE appears.
- Date on which it became a registrable RLE in relation to your company.
- Which of the five conditions for being a PSC have been met, with quantification of its interest where relevant.
5. Who is responsible for maintaining the PSC register?
It is the legal responsibility of company/SE directors, company/SE secretaries and designated LLP members to obtain and confirm PSC information, maintain the firm’s own PSC register and deliver the required PSC information to Companies House on the annual confirmation statement.
Failure to comply with these requirements is a breach of statutory duties and a criminal offence. You could face a personal fine and/or a prison sentence up to two years.
6. Filing PSC information at Companies House
Companies must submit the information held on their own PSC register to Companies House when they deliver their first confirmation statement. You will submit a confirmation statement when your next annual return would have been due.
Companies registered on or after 30th June 2016, however, are required to provide PSC information during the incorporation process.
PSC information will be entered on the central public register at Companies House, either upon incorporation or when an existing company files its first confirmation statement. You must confirm, and update where necessary, PSC information every 12 months when you deliver a confirmation statement.
7. Updating your PSC register
If there are any changes to PSCs, you must update your own PSC register as soon as possible. You will then report these changes to Companies House when you file your next confirmation statement. The central register will be updated to reflect these changes when you deliver the confirmation statement.
8. Do I still have to maintain other statutory registers
The PSC register does not replace existing statutory registers, such as the registers of shareholders, guarantors, company directors, company secretaries or LLP members. You must identify all PSCs and enter their details on the PSC register, in addition to maintaining your existing statutory registers.
9. Can I leave the PSC register empty?
You must never leave the PSC register empty. If you are confident that there are not PSCs that meet any of the five conditions, you must enter the following statement on the register:
“The company knows or has reasonable cause to believe that there is no registrable person or registrable relevant legal entity in relation to the company.”
10. How long do I have to keep PSC information?
Companies are legally required to keep information about PSCs for ten years after they have stopped being a PSC of the company. Their details will be kept by Companies House indefinitely.
11. Inspection of PSC register
You must keep your PSC register at your registered office or SAIL address and make it available for inspection upon request. Companies House must be informed about the location of your PSC register.
Any person or organisation may request to inspect your PSC register free of charge, or receive a copy for an optional fee up to £12. Upon granting access to the register, you must not disclose a PSC’s usual residential address.