By Jamie Berry
What is it?
The Small Business, Enterprise and Employment Act 2015 (the Act) has amended companies and Limited Liability Partnerships’ (LLP) obligations under the Companies Act 2006 by adding the requirement to keep a register of ‘people with significant control’ (PSC’s). This requirement will come into force from 6 April 2016.
What are companies required to do?
From 6 April 2016, all companies and LLPs will be required to keep and update a register of persons with significant control, referred to as a PSC Register, available at the Company’s registered office. This is in the same manner that you must presently keep an updated register of directors, secretaries and members. Companies and LLPs will also be required to file a register of every ‘relevant legal entity’, which is defined as a corporate body or firm that would be a PSC if it was an individual. Private limited companies will have the option of filing this information with Companies House instead of keeping a separate register.
Failure to comply with this obligation could result in a fine of up to £1000, and a daily fine of up to £100 for continuing non-compliance. This counts as an offence committed not only by the Company itself, but also by its secretary and director(s), all of whom will therefore be liable.
Who is a PSC?
A PSC is defined in the Act as an individual that fits into one or more of these conditions:
- they hold, directly or indirectly, more than 25% of the shares in the company, or hold/are holding a right to share in over 25% of the company’s profits or capital;
- they hold, directly or indirectly, more than 25% of the voting rights in the company (excluding those held by the company itself);
- they hold, directly or indirectly, the right to appoint or remove a majority of the board of directors;
- they have the right to, or actually do exercise significant control or influence over the company, meaning that they can direct and ensure the adoption of policies and activities of the company;
- they, as a trustee of a trust or member of a firm, which is not a legal person, hold significant control or influence (meaning the same as above) over that trust or firm, and that trust or firm fits into one of the above conditions.
What should I be doing?
If you are the director of a UK based company or LLP, you may wish to consider the above list of conditions in respect of your own business, and for example create a list of potential PSC’s in advance of this obligation coming into force on 6 April 2016. However, if you have any doubts about whether or not somebody should be registered as a PSC, then please do not hesitate to get in touch with our Corporate Department.
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