New Regulatory Requirements for Companies under the Small Business, Enterprise and Employment Act 2015
This is an extract of an in-depth article prepared by our Corporate and Commercial team. Please see below for further information or to obtain a copy of the full article.
- What is new?
From 6th April 2016 UK companies will be required to set up and maintain a register of information about the individuals who ultimately own and/or control them (a “PSC Register“). These individuals are termed “persons with significant control” (“PSC“). PSCs are not necessarily the immediate legal owners of shares in a company, and they include not only the individuals who are the ultimate beneficial owners but also other people who make decisions in relation to and exercise actual control over a company.
The persons who have to be included in the PSC Register are narrowly defined. They are either:
(a) An individual PSC who directly or indirectly holds shares or exercises control in the company; or
(b) Another English company which maintains its own PSC register or has equivalent disclosure obligations. Such a company is referred to as a relevant legal entity (“RLE“).
- Public Availability of the information in the PSC Register
The public will have the right to inspect a company’s PSC Register. In addition, from 30th June 2016, companies will have to include the information in their PSC Register in a confirmation statement (which will replace the annual return) which is filed at Companies House. The intention is that Companies House will hold a full set of information on the ownership and control of all UK companies by April 2017.
The framework for the rules relating to PSC Registers is found in the Small Business, Enterprise and Employment Act 2015. Of all the reforms in that Act, the introduction of the PSC Register is the most significant, as it will fundamentally change the nature of the information which will be publicly available about companies to include the identities of their ultimate beneficial owners and of other non-shareholders who effectively control them. This information can no longer be kept private: the government’s aim in requiring companies to hold PSC registers is said to be to promote transparency and accountability. It should be possible, in the future, to determine who ultimately controls a company, not simply who is the legal holder of its shares. This may be of particular concern to trustees who own or control shares.
- Will my Company need a PSC Register?
The requirement to have a PSC Register extends to all private UK companies, which includes companies limited by shares (dormant or trading), companies limited by guarantee and community interest companies. Societas Europaea and limited liability partnerships are also required to have PSC Registers. Broadly speaking, the only companies excluded from the requirement are publicly listed companies as they are subject to separate and stringent disclosure requirements.
Every private company limited by shares or guarantee and every LLP should now consider who its shareholders or members are and set up its PSC Register before April 2016.
- Further information
If you would like access to see the full text of this article, or advice about your obligations under the new rules, please contact Stephen Morrall in the Company and Commercial team, or the partner at Hunters who has conduct of your affairs. The law is stated as at 31st January 2016.