02 May 2017

What is this PSC register everyone's talking about?

Linkedin

The register of people with significant control (the PSC register) is a register of individuals or legal entities that have significant control over specified UK organisations. It was introduced under the Small Business, Enterprise and Employment Act 2015 with the purpose of identifying the ultimate beneficial owners and controllers and making their holdings public. The requirements are intended to increase corporate transparency with the aim of combatting money laundering, the financing of terrorism and tax evasion. The PSC register sits alongside the usual company registers including the register of directors and the register of shareholders.

Why do I care?

The requirement for UK incorporated companies and UK LLPs to have a PSC register and keep it up to date came into force on 6th April 2016. The requirement to keep a PSC register initially covered companies limited by shares, companies limited by guarantee (including community interest companies), societas europaea, wholly-owned subsidiaries, dormant companies and LLPs. Companies traded on prescribed markets (e.g. AIM and the NEX Exchange Growth Market), unregistered companies, Scottish limited partnerships (SLPs) and certain general Scottish partnerships (SPs) were brought into the regime on 26 June 2017 and required to register their PSC information at Companies House from 24 July 2017. The only exception to the requirement to register PSC information is for UK companies whose voting shares are admitted to trading on a regulated market situated in an EEA state or are traded on certain stock exchanges (though subsidiaries would still need to have a PSC register).

What does PSC mean and who are they?

PSCs are people who meet one of the specified conditions for companies or LLPs, SLPs and SPs.

For companies the specified conditions to be a PSC are that a person (i) holds directly or indirectly more than 25% of the company shares; (ii) holds directly or indirectly more than 25% of the voting rights; (iii) has the right to appoint or remove the majority of directors; or (iv) has the right to exercise, or actually exercises, significant influence or control over the company. The final condition is holding the right to exercise, or actually exercising, 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. There are equivalent provisions for LLPs, SLPs and SPs.

A company or partnership may have multiple people with significant control over it or it may have none.

What does "significant influence or control" in the conditions mean?

As you might imagine it's complicated but there's statutory guidance on the meaning of "significant influence or control". It does not provide an exhaustive list but rather a number of principles and examples which would be indicative of holding the right to, or actually exercising, significant influence or control. It also gives a non-exhaustive list of the types of roles and relationships which a person might have with an organisation which would not, on their own, result in that person being considered to have significant influence or control. This includes people such as directors, lawyers and accountants.

So it's just people that go on the register?

Unfortunately not. If a company or partnership is owned or controlled by a legal entity then that legal entity must be put on the PSC register if it is both relevant and registrable in relation to a company or partnership.

Relevant?  Registrable?  What does that mean?

A legal entity is a body corporate or a firm and is relevant (a "RLE") in relation to a company or partnership if it meets one or more of the relevant conditions in relation to PSCs (see above) and is subject to its own disclosure requirements i.e.:

  • it holds its own PSC register; or
  • it is one of the excepted UK companies listed on certain stock exchanges. 

A legal entity is registrable in relation to a company or partnership if it is the first relevant legal entity in an organisation's ownership chain.

What do I have to write on the register?

A PSC register can never be blank. Prescribed information on PSCs and registrable RLEs needs to be included in the PSC register, or a description of the status of investigations into the identity of the PSCs or RLEs in the prescribed form needs to be stated. 

What if I don't know who my PSCs or registrable RLEs are?

Organisations are under a duty to take reasonable steps to find out who their PSCs and registrable RLEs are and should contact them or others who might know who they are to confirm they meet one or more of the conditions and that the prescribed information required for the PSC register is correct. 

What if I think I should be on another organisation's PSC register?

There is a duty on individuals or legal entities who think they should be on a PSC register to tell the organisation and provide it with the necessary information. 

How often do I need to update my PSC register?

As of 26 June 2017 organisations have to update their PSC register as soon as possible. For changes to an individual PSC an organisation must update the register within 14 days of receipt of confirmation of the relevant details regarding the individual. For an RLE it is within 14 days from the date the organisation has details of the relevant change occurring. The organisation then has 14 days after updating its PSC register to inform Companies House of the change. For organisations brought under the regime in June 2017 the requirement to update comes into force on 24 July 2017. SLPs and SPs are not required to keep their own register but must file their PSC information with the central public register at Companies House within 14 days of obtaining it.

What if I don't want to?

There are a number of obligations under the new regime for companies, LLPs, SLPs, SPs and PSCs a breach of which is a criminal offence. Sentences range from a fine to up to two years imprisonment. For individuals or legal entities who fail to comply with a company's enquiries they may have their shares disenfranchised or restrictions placed on them. 

Will the register be public?

Each register is open to public inspection and information filed at Companies House is freely available online. The residential addresses and day (but not the month or year) of the date of birth of individuals will be suppressed. Applications can be made to keep PSC information private but only if there is a risk of people being put at risk of serious violence or intimidation in the event that the information is public.

This sounds like there is a lot of work involved.

For some companies completing the PSC register will be pretty straightforward but for others it will be both complex and onerous. 

What can I do?

If you would like help with any aspects of the PSC register obligations please contact your usual Stephenson Harwood contact.

Linkedin

KEY CONTACT

Ioana Platts-Mills

Ioana Platts-Mills
Knowledge development lawyer

T:  +44 20 7809 2335 M:  Email Ioana | Vcard Office:  London

  • Related Services
  • Related Locations