Changes to company law will require UK registered companies to maintain a register of Persons with Significant Control or a PSC register. These changes become effective at the end of June 2016 and change the way companies are formed and information recorded by Companies House.
The PSC register is being implemented to make UK registered companies more transparent. Currently it is possible to create UK companies and LLP’s with nominee directors, shareholders and members who act on behalf of the real owners and controllers of these businesses. A common example is when a UK company is 25% or more owned by another company. It is then not transparent or straight forward to understand who owns the company as you need to look at the shareholder company’s structure.
Although the reason for doing this may well be legitimate it does create a company structure that hides the real identity of the owners and could potentially be used in a way that hides taxable assets from the UK tax office or for even more sinister purposes.
The PSC register is being introduced by section 81 of the Small Business, Enterprise and Employment Act 2015. A Working Group, drawn together by the Department for Business, Innovation and Skills (BIS) made up of business, legal and civil society representatives have been asked to help BIS develop guidance for use by business and individuals in order to comply with the new requirements.
The draft guidance currently explains the effect on companies and Limited Liability Partnerships. It covers the process of identifying and recording PSCs but it does not cover the detail of how to complete filings in relation to PSC information at Companies House. Guidance on filing PSC information with Companies House when incorporating or when making annual Filings has yet to be released.
A PSC is an individual who meets one or more of the following conditions in relation to a company:
- Directly or indirectly owns more than 25% of the shares
- Directly or indirectly holding more than 25% of the voting rights
- Directly or indirectly holding the right to appoint or remove the majority of directors
- Otherwise having the right to exercise, or actually exercising, significant influence or control
- Holding the right to exercise, or actually exercising, significant influence or control over the activities of a trust or firm which is not a legal entity, but would itself satisfy any of the first four conditions if it were an individual.
More information will be published when it becomes available.
