The PSC register and what it means for you

The Small Business, Enterprise and Employment Act 2015 (the “Act”) received Royal Assent on 26 March 2015. The aim of the act was to reduce red tape for small businesses and to increase the transparency of companies. The act has staggered implementation dates and from 6 April 2016, one of the biggest changes is the introduction of the persons with significant control (‘PSC’) register.

The PSC register
The new register of PSCs (PSC register) will address concerns about the nature of the existing company share register, as this only shows only the legal owners and not the beneficial owners of a company’s shares. The PSC register will give accurate and current information on who ultimately owns and controls companies and it will be publicly available on a central registry held at Companies House.

What is a PSC?
A PSC is a legal person (either a natural person, LLP or a company) with significant control over that company. The Act defines ‘significant control’ as:

  • direct or indirect ownership of more than 25% of the shares in the company;
  • direct or indirect control of more than 25% of the voting rights in the company;
  • direct or indirect right to appoint or remove or appoint a majority of the directors of the company;
  • the exercise or right exercise significant influence over the company; or
  • the exercise or right to exercise significant influence or control over the activities of a trust or firm which itself meets one of or more of the first four conditions.

To assess the above, the articles and any shareholders agreements need to be considered along with historical voting patterns and any veto or casting vote rights amongst others. This therefore puts the outcome of what were previously non-public documents into the public domain to a certain extent.

What are the requirements?
The main requirements in relation to the PSC register are:

  • a company will be required to hold and keep available for inspection a PSC register, unless it is excluded from the requirement by regulations or it is a company to which the Disclosure Rules and Transparency Rules, DTR 5 apply;
  • the information on the PSC register (which must include details of the individual’s name, date of birth, nationality, address and details of their interest in the company) must be filed at Companies House upon incorporation and at least once every twelve months (on the new confirmation statement, which will replace the annual return);
  • companies will be required to take reasonable steps to identify people they know or suspect to have significant control by giving notice to the suspected PSCs or others to obtain information this includes, where necessary, locating a natural person who is the ultimate PSC in complicated corporate structures;
  • PSCs will be required to disclose their interest in the company to the company in certain circumstances;
  • companies will be required to update the PSC information if they know or might reasonably be expected to have known that a change to their PSCs has occurred;
  • PSCs will be required to inform the company of any changes to the information recorded in certain circumstances; and
  • all information will be publicly accessible with the exception of the residential address and the day of the date of birth, unless the company elects to hold its PSC register at Companies House (individuals will be able to apply to have information suppressed from disclosure in exceptional circumstances).

Impact
As well as the legislation there is statutory and non-statutory guidance as to how companies ascertain who the PSCs are. In most cases, this should be a relatively straightforward exercise, but in complicated structures, the administrative task of ascertaining who the PSCs are could be lengthy and costly for some companies, especially where the controlling parties are registered overseas.

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Danielle Collett-Bruce

Senior Solicitor, Commercial & Corporate

Danielle advises on mergers and acquisitions, new business ventures, corporate structures and joint ventures, investments, company law, governance and procedure. Danielle has recently advised on...

Senior Solicitor, Commercial & Corporate

Danielle Collett-Bruce

Danielle advises on mergers and acquisitions, new business ventures, corporate structures and joint ventures, investments, company law, governance and procedure.

Danielle has recently advised on transactions in a broad range of sectors, including leisure and tourism, technology, media & telecommunications, transport & logistics, childcare & education, IT & software and energy & utilities and for a wide range of clients, ranging from small family-run businesses and mid-market companies to larger corporates.

Danielle is known for her client focus, clarity and pragmatic approach and was named as LawNet’s Young Lawyer of the Year 2016/2017.

Danielle has lived in the Surrey area for her whole life studying law at University of Reading and the College of Law in Guildford. Danielle trained with Hart Brown, and since qualification in 2014, has specialised in Commercial & Corporate work.

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