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Companies to be required to set up a PSC register

Subject: Limited companies

Source: GOV.UK

At the Summit hosted by the UK in June 2013, the G8 countries endorsed “core principles” which were said to be “fundamental to the transparency of ownership and control of companies and legal arrangements”. The core principles require in particular that companies should know who owns and controls them and their beneficial ownership, and that beneficial ownership information on companies should be accessible onshore to law enforcement, tax administrations and other relevant authorities.

The UK has acted to implement the G8 core principles through the Small Business, Enterprise and Employment Act 2015 (SBEEA). This Act has among other things introduced powers for the Government to require companies to establish a register of persons with significant control (PSC) and to provide the information to Companies House.

Companies are to be required to set up their own PSC register from January 2016 and from April 2016 to give the information to Companies House. Companies House will make PSC information available for free in one central, searchable public register.

Provisions in the SBEEA have since May 2015 already prevented companies from issuing bearer shares, and to require existing bearer shares to be converted into registered form.

A "person with significant control" is defined in the SBEEA as a person who meets one or more of the following criteria in relation to a company:

* .Directly or indirectly owns more than 25% of the shares or voting rights in the company;

* .Directly or indirectly has the power to appoint or remove the majority of theboard of directors of the company;

* Otherwise has the right to exercise or actually exercises significant influenceor control over the company.

The new requirement to maintain a PSC register will apply to all UK private and public companies except for companies whose shares are traded publicly and which therefore already report under DTR 5.

The Department for Business, Innovation & Skills (BIS) has now issued a consultation entitled Creating a register of people with significant control which presents the draft Regulations required in order to implement certain  detailed aspects of the register and seeks views on them. Responses are required by 17 July 2015.

The Government acknowledges that the PSC register will “impose many new requirements on UK companies”. However, the Government states that it has striven to ensure that the burden on companies is kept to a minimum by keeping the obligations as simple as possible. The PSC register will have to be available for inspection by any person. However, private companies will be allowed instead to choose to make the information available by including it in its Annual Return filed at Companies House.

Comment: most companies will already have been required to provide information about PSC because it is required by banks and other FSMA regulated firms in order to open and account or to establsh a business relationship. However, it should be noted that additional burdens will be imposed upon companies and indeed beneficial owners because:

* companies will be required to take "reasonable steps to to find out if there is anyone who is a registrable person" and to ensure the information is accurate and up to date;

* persons must comply with a company's request for information about a PSC if they have the information; if they have not already received an information request, persons who know or should know that they are registrable as PSC of a company must on their own initiative supply the requred information within one month of the date they became aware of the information;

* failure to comply with the regulations will render the company and every officer of the company who is in default,, or the PSC or other person who fails to comply, guilty of an offence and liable on conviction on indictment, to imprisonment for a term not exceeding two years or an (unlimited) fine (or both);

* the UK legislation will go very much further than the scope of the G8 'core principles', in that the PSC information will be available to the public rather than only to law enforcement, tax administrations and other relevant authorities.

Contact Legaleze for further information on the PSC Register.


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