Companies - Who's in Control?

Published byGraham Bell

23rd February 2016

• Summary
• Virtual Registers
• What the PSC will contain
• Summary of the new rules

From 6 April 2016, all UK corporate entities which currently register information on their members at Companies House will be subject to a new requirement to obtain and hold beneficial ownership information and provide it to a central registry.

The central registry will be known as the Register of People with Significant Control ("PSC Register"), and it will be open to the public to inspect.

The affected entities include "normal" companies as well as companies limited by guarantee and LLPs, and the rules will apply to existing as well as new corporate entities. However, companies which are subject to the Disclosure and Transparency Rules, or have securities listed on a regulated market subject to equivalent disclosure requirements, will be exempt from the new requirements. 

Summary

These changes, coming into force on 6 April 2016, will affect all existing and new registered companies and other such entities.  Directors and shareholders should therefore be sure that they are able to comply with the rules, or at least able to make a sensible decision on whether to opt out using the exception (if the exception is brought into force).

As always, solid advice on the impact of this is available from WJM's Corporate team, so if you have any concerns or queries, please contact Graham Bell, Colin Millar or Alan Barr.

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Virtual Registers

It should be noted that under the Company Filing Requirements proposals, a private company will have the option of not keeping any, or all, of the following registers:

• register of directors;
• directors' residential addresses;
• secretaries;
• members; and
• the proposed PCS Register.

Instead, such a company would be required to keep the information available for inspection on the public register at Companies House. This would include the full date of birth of beneficial owners (as well as of directors).

It is not yet known if this exception will form part of the finalised rules.

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What the PSC will contain

A key issue is the extent to which the beneficial ownership register at Companies House should be publicly accessible. The Government has taken the view that the public register should contain the following information:

• full name;
• month and year of birth;
• nationality;
• country or state of usual residence;service address; and
• date on which the beneficial owner acquired his or her beneficial interest and details of that interest and how it is held.

Companies House will also hold a residential address and a full date of birth for the beneficial owner but this information will only be accessible to specified authorities. The Department for Business, Innovation and Skills is considering which UK and overseas authorities should have access to the protected information.

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Summary of the new rules

The main rules for the PSC Register are:-

1. A "person with significant control" is defined using the same test of "beneficial ownership" which is found in the anti-money laundering legislation. Information on individuals ("beneficial owners") who ultimately own or control more than 25 per cent of a company's shares or its voting rights, or who otherwise exercise control over a company or its management, will need to be obtained and held by the company and provided to the PSC Register at Companies House. Where a qualifying beneficial ownership is held through a trust, in most cases this will require only the trustee(s) to be registered.
2. Companies will be required to maintain a register of beneficial owners, including their residential addresses (although the residential addresses will not appear on the public register). All of the information held must be notified to Companies House.
3. Companies will have to update the register of beneficial owners if they know, or might reasonably be expected to know, that a change in beneficial ownership has occurred. Beneficial owners will also be under an obligation to inform the company of any changes.
4. The provisions of Part 22 of the Companies Act 2006, which give a public company powers to require information about interests in its shares, will be extended to private companies, to assist preparation and maintenance of the PSC Register.
5. Companies will be required to provide an initial statement of beneficial ownership on incorporation and to update their beneficial ownership information at least once a year. As part of this, companies will be required to list all changes that have occurred during the period in question.
6. Private companies can opt out of holding their own PSC Register and instead maintain and update their beneficial ownership register at Companies House directly. Beneficial owners of such companies can provide a service address for the public register, as many directors currently do, if they want to avoid their home addresses being made public. More detail on how companies should update the information can be found in the Government response on Company Filing Requirements, which proposes to amend the annual return process.
7. The requirement to complete an annual return will be amended to a requirement to "check, notify changes if necessary and confirm" information at least once in a 12-month period. The Government intends that beneficial ownership information in the PSC Register should form part of this "check and confirm" system.

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