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A significant change for the overwhelming majority of companies, Societas Europaea and Limited Liability Partnerships incorporated in the United Kingdom came into effect from 6th April 2016 under the Small Business Enterprise and Employment Act.
From that date, a company must have a Register of ‘People with Significant Control’ (PSC) and keep it up-to-date. Since 30th June, this information is reported to Companies House as part of the new annual Confirmation Statement that has replaced the Annual Return. For details on the Confirmation Statement, please click here.
The purpose of this change is to lift the veil of who owns and controls companies in the United Kingdom.
For the vast majority of companies, their PSCs will simply be individuals who:
In exceptional circumstances, there may be:
For each PSC, the company must verify and hold on the Register the following information:
Remember, the PSC Register must be made available to anyone on request so it is vital to hold the information in such a way that the residential address can be suppressed.
The golden rule is that a company’s PSC Register can at no time be empty.
If your company has not collated and verified the information for your PSC, the Register is required to state:
“The company has not yet completed taking reasonable steps to find out if there is anyone who is a registrable person or a registrable relevant legal entity in relation to the company.”
Similarly, it is perfectly possible for a company to have no PSCs, for example where it is equally owned by five individuals. In this case, the Register is required to state:
“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.”
More on what constitutes a relevant legal entity later but first what it deemed to be ‘significant influence or control’.
Significant influence is deemed to be where a person can ensure that the company generally adopts the activities they desire whereas control is where a person can direct the activities of the company. This is the case irrespective of whether the person achieves any economic benefit.
An example of significant influence or control would be a person who, whilst not on the board, regularly influences a significant section of the board or is regularly consulted on board decisions.
Another would be a company founder who, whilst no longer having a significant shareholding, continues to influence other shareholders on how to vote.
On the other hand, significant influence or control is not intended to apply to a person that provides advice or direction in a professional capacity. Nor does it apply to a person for merely being a director of a company.
By definition, a PSC is an individual. However, if your company is owned or controlled either fully or in part by another legal entity, the details of this legal entity must be included in the PSC Register, if it meets both the relevant and registrable tests.
A legal entity is relevant in relation to your company, if it meets any one or more of the conditions for a PSC and either:
A relevant legal entity (RLE) is registrable for your company if it is the first RLE in the ownership chain.
If the legal entity is not deemed relevant, the most likely case being if it is an overseas privately-owned company, it is not in itself registrable.
However, the details of the individuals or RLE who ultimately have a majority stake in that legal entity, either directly or indirectly, must be recorded on the PSC Register.
CooperFaure provides a comprehensive Company Secretarial service for our clients and, especially if your company has a more complex share rights or ownership structures, would be pleased to review this for you. Please email us at tax@cooperfaure.co.uk for an initial, free consultation.
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