The PSC register is a new statutory register that limited companies will be required to maintain as from 6 April 2016. The purpose of this requirement is to achieve transparency in limited companies by requiring companies to formally identify people/entities with ‘significant control’ in a register. This means that all individuals/entities who are the ultimate owners or controllers are identified together with their interests with the ultimate goal of preventing people/companies from hiding their interests in order to combat tax evasion, money laundering etc. Breach of an obligation under the new PSC regime could result in criminal liability and imprisonment or a fine (or both).
Who does this apply to?
This requirement applies to all UK limited companies - including dormant companies. The Company is required to take ‘reasonable steps’ to find out whether people/ entities have significant control or influence over the company. The company is then required to contact these people and obtain the necessary information to complete the register. Once the information is received, it should then be entered onto the register. The information on the PSC register will need to be filed at Companies House each year when filing the company’s new confirmation statement which replaces the existing annual return on 30 June 2016.
Whilst this is a company record and there are set requirements as to what the register must contain, there is no set format for a PSC register to take. It may however be kept in hard copy or electronically. It must however, contain certain information and official wording.
What is a PSC?
A PSC is an individual/entity who meets one or more of the following conditions:
- Directly/indirectly holds more than 25% of the shares
- Directly/indirectly holds more that 25% of the voting rights
- Directly/indirectly holds the right to appoint t or remove the majority of directors
- Has the right to exercise, or actually exercises significant influence or control
If the company is owned or controlled by a legal entity as opposed to individuals, the legal entity may need to be recorded on the register if it is both relevant and registrable (RLE). A legal entity will be relevant if it:
- Would have been classed as a person with significant control had it been an individual; and
- Has to maintain its own PSC register (unless trading in a regulated market)
Completing and maintaining the register
Once the register is created, it can never be blank even if the company has no PSCs or RLEs. At the same time as creating the RSC register, the company must begin its investigations as to whether it has any PSCs or RLEs and a company is obliged to take ‘reasonable steps’ and identify them. Failure to take reasonable steps is a criminal offence by the company and every officer in default. In addition to investigating, the company is required to send notices to anyone it knows or has reasonable cause to believe to be a registrable PSC or registrable RLE subject to exceptions.
Once a registrable PSC or RLE has been identified, the company must consider whether it has sufficient information to enter it onto the register. The company must not register a person’s interest unless information is complete and accurate.
There is a continuing obligation of keeping the register up to date and the company must deal with/investigate any relevant change accordingly. Any change must be noted once the company has been supplied by the PSC concerned or with the knowledge and the date of change must be noted.
Word to the wise
To avoid fines and the risk of imprisonment companies must ensure that they follow the PSC regime and complete and maintain registers. If you require help in establishing yours please do contact us.