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Update on the implementation of PSC registers and other changes to company law and corporate governance.
The landscape of legislation relating to company transparency and filing requirements is changing as we know it – just not as quickly as was originally planned. The updated implementation dates of the various requirements brought in by the Small Business, Enterprise and Employment Act 2015 have been published by Companies House and confirmed by the department for Business, Innovation and Skills. We understand that the dates are however still subject to change, depending on the progress of the regulations through Parliament this autumn.
Below are the currently anticipated implementation dates of the various changes, and further information on the requirements relating to the keeping of registers of persons with significant control (“PSC Registers”). For further details of these changes to company law in the UK, please see our article from May this year.
10 October 2015
New and simpler processes related to disputes in respect of registered offices and directors will come into force.
Companies will be required to keep PSC registers from April next year – see further details below.
From October next year, the prohibition on corporate directors will come into force. Exceptions to this prohibition are likely and currently the subject of consultation.
Late 2016/Early 2017
From late 2016/early 2017 companies will be permitted to voluntarily file additional information at Companies House, although what information will be included is yet to be confirmed.
From what will now be April 2016, all companies (except those to which Chapter 5 of the Disclosure and Transparency Rules sourcebook applies or similar requirements where UK companies are listed overseas) will be required to keep a public register of people with “significant control” over them (a “PSC Register”) in addition to their other statutory registers. The requirement to file this information with Companies House will not take effect until June 2016.
The implementation of this section of the Small Business, Enterprise and Employment Act 2015 is part of a Europe-wide initiative to make companies more transparent to encourage trust, and also to assist authorities in dealing with tax evasion and money laundering.
The PSC register will need to be updated annually, using the confirmation statement which is to replace the annual return, and must be available for inspection at a company’s registered office. Companies also have the option to elect to keep such information on the centralised public record at Companies House instead of in a separately maintained PSC Register. On incorporation, a statement of those persons holding initial significant control will need to be included in the documents filed with Companies House.
A person exercises “significant control” over a company if he/it (alone or as one of a number of joint holders) meets one or more of the following conditions:
An expert working panel is drafting statutory guidance on the meaning of “significant influence and control” and this guidance is due to be published in autumn 2015. It is also worth noting that the government intends for the particulars in the PSC Register to include note of which of the “significant control” conditions applies to each individual listed therein and is also looking into the possibility of exceptions to inclusion in the PSC Register. Where either of the first two conditions applies, there may also be a requirement to state the percentage of shares or voting rights held, either specifically or by reference to certain bands of percentages (e.g. more than 25% but less than 50%).
The PSC Register must only include the particulars of those persons and relevant legal entities that have significant control over a company. A “relevant legal entity” is a legal entity that would have been a person with significant control if it had been an individual and is subject to its own disclosure requirements as specified in the Companies Act 2006. As exemplified below and to prevent unnecessary duplication, this means that company B would need to be listed in the PSC register of company A, but company C would not (although company C would need to be included in the PSC register of company B):
A company is obliged to investigate and keep up to date its information on each person with significant control (“PSC”). This includes requirements to give notices to PSCs or persons who have knowledge about PSCs in order to obtain information.
There is also a positive obligation of disclosure for individuals and legal entities who may be PSCs, in order to assist companies in ensuring information is correct and up to date. Companies will be able to apply sanctions if an individual or legal entity does not comply with these disclosure requirements, which include the ability to place restrictions on shares without a court order as long as certain requirements are met.
Guidance is currently being drafted to assist companies and PSCs with these new requirements. It is also anticipated that limited liability partnerships will be required to keep a PSC register from January 2016. 2017 is likely to see the requirement for companies to update the public register at Companies House at the time of any change to the PSC register, instead of on an annual basis, to ensure that the PSC register is current and complies with anticipated European law in respect of money laundering.
We will update you further once the implementing regulations become effective and guidance has been published. For more information on the above changes, please contact Kathryn Lynne or Lydia Harratt.
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