Since April 2016, UK companies have been required to create and maintain a list of “people with significant control” (PSC) within their company. Companies must then file these lists with the Companies House. Details of the Small Business, Enterprise Employment Act 2015 changed the prevailing laws within the Companies Act 2006 in hopes of increasing transparency over the ownership and control of UK companies and LLPs. Other business structures regulated under this provision include Societas Europaea (se) and eligible Scottish partnerships (SLP).

While requiring this kind of record-keeping may seem like a simple request, the laws governing who — or what — qualifies as a PSC are, nonetheless, complex. Everything you need to know about PSC and the implications for your business structure are covered in the 11 questions below.

1) What is the intention of the PSC Register?

The PSC Register is intended to provide more complete transparency as to the direct and indirect ownership of UK companies. This move was made as an attempt to combat corruption, tax evasion and financing of terrorism.  

2) Who qualifies as a PSC?

A PSC is an individual who meets one or more of the following conditions:

  • Directly or indirectly owns more than 25 percent of the company’s shares
  • Directly or indirectly holds more than 25 percent of the company’s voting rights
  • Directly or indirectly has the right to appoint or remove the majority of the company’s directors
  • Has the right to or actually exercises significant influence or control
  • Has the right to or actually exercises significant control over a trust or company that meets any of the other four conditions

So the PSC is primarily a list of individuals, but as stipulated by the fifth condition, this status may pertain to a UK company and certain non-UK listed companies if they are considered “relevant legal entities” (RLE).

3) What information is contained in the PSC Register?

Qualifying individuals must include the following information in the PSC listing:

  • Name of individual
  • A service address for the individual
  • The country, state or part of the UK in which the individual claims residency
  • Nationality
  • Date of birth
  • Usual residential address of individual
  • Date upon which the individual met conditions to become PSC and the nature of their control

Qualifying entities must include the following information in the PSC listing:

  • Name of the legal entity
  • Registered or principal office address
  • The form of legal entity
  • The law by which the entity is governed
  • The names and registration numbers of companies for which it claims significant control
  • The date when it met the requirements to be a RLE

4) Who is responsible for collecting the information within the PSC Register?

The responsibility for collecting and filing information on PSCs within will vary from business to business. Typically, this task falls to the director or secretary of a company, a designated member of an LLP, or a person acting in an advisory role for a company or SE.

The law states that you must make reasonable steps to determine whether any individual meets the PSC requirements, or whether any legal entity can be considered a registered RLE in relation to your company. Failure to make reasonable steps is a criminal offense.

Guidelines for reasonable steps include:

  • Reviewing your register of members, articles of association and statement of capital to ascertain whether any individual holds more than 25% of shares
  • Reviewing your register of shareholders and articles of association to ascertain whether any individual has 25% voting rights
  • Reviewing provisions in the articles of association or any other covenants or agreements concerning the appointment or removal of directors
  • Considering whether any individual who does not meet one or more of the above conditions nonetheless has significant influence over the way the company is run
  • Considering whether there is a trust, firm or other legal entity that would meet one or more of the four stated conditions if it were a person

If you determine that there are individuals or legal entities that qualify as PSCs, you must first confirm the necessary information with them before filing your PSC Register with the Companies House.

5) When should companies file their PSC Register with the Companies House?

Beginning in 2016, companies that existed before the establishment of the PSC Register were required to file their registers to the Companies House as part of their annual confirmation statement. New companies must file their PSC information as part of the initial incorporation process.

6) How often must a company update their PSC registers?

PSC registers must be kept up-to-date. Any changes in qualifying individuals or RLEs should be noted in the company’s PSC Register within 14 days of the change. The company then has an additional 14 days to file that change with the Companies House.

7) If I believe I am a PSC, what are my responsibilities?

Individuals who believe they qualify as a PSC are required to notify the company of their status. It will be incumbent upon the company to verify that status and confirm all information with the individual.

Individual contacted by a company wishing to confirm information for the PSC Register must respond appropriately. Failure to do so is a bona fide offense.

8) Is the information contained within the PSC Register accessible to the public?

Companies must keep their PSC Register at their registered office address and must maintain it  for free public inspection. The information on the PSC Register will also be available to search free of charge via the Companies House. Individuals who desire access to a company’s PSC Register must make a request to the company or Companies House stating their name, address and purpose for seeking the information. The company then has five days in which to comply. Some information, such as the residential addresses of individuals, will not be available to the public. A provision exists that allows a company to keep information concerning a PSC private if there is reason to believe that sharing the information would put the individual at risk of violence or intimidation.

9) Are any companies exempt from filing a PSC Register?

There are a few companies who may opt not to file a PSC Register with the Companies House. Those exemptions read as follows:

Companies with voting shares admitted to trading on a regulated market in the UK or European Economic Area (other than the UK) or on specified markets in Switzerland, the USA, Japan and Israel . . . Overseas entities operating in the UK might be subject to requirements in their home country but are not subject to the requirements of Part 21A to hold a register . . .Eligible Scottish partnerships are not required to keep a PSC register but are required to deliver PSC information to Companies House for the central register.

10) Are companies with no PSC still required to file with the PSC Register?

The PSC Register cannot be empty. If your company has taken all reasonable steps to ascertain whether there is a PSC or RLE in relation to your company are confident that no individuals or legal entities qualify, you must still file a PSC Register relating that information. The official wording is as follows:

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. 

11) What are the penalties for not complying with the PSC Register law?

Failure to keep a PSC Register is a criminal offense. If a company or LLP fails to maintain a PSC Register, every officer of the company or every designated member of the LLP can be fined a maximum of £1,000 pounds.

If a company or LLP fails to take reasonable steps to identify PSCs or RLEs, then the company and its directors or the LLP and its designated members are liable to a conviction of a maximum of two years in prison and/or a fine.

Conclusion

Whether you are a small company opening its doors in Bristol or an international corporation setting up a subsidiary in London, the PSC Register will affect the way you conduct and record your business structures. The information contained within the PSC Register will hopefully combat corruption, tax evasion and the financing of terrorist cells, but the work required to obtain this information will have to be done by you. The answers above should help guide you; for more specific information, consult a legal professional.