The requirements to keep a PSC register are set out in Part 21A of the Companies Act 2006 (the ‘Act’) (as inserted by SBEE and subsequent regulations including:
With some exemptions (eg, companies with voting shares admitted to trading on a regulated market in the UK or European Economic Area or on certain other specified markets), all UK companies (including charitable companies and subsidiaries of exempted companies) and Limited Liability Partnerships (LLPs) and certain Scottish Partnerships are required to keep a PSC register, and people who control companies or other relevant entities will be subject to disclosure requirements.
Relevant companies and other entities must keep the registers and file relevant details with Companies House.
BEIS has issued statutory and non-statutory guidance and summary guidance, available from this link.
The summary guidance for companies (of 5 pages) outlines the main requirements including what information is required to be kept on the register and what information is public and gives an illustration of how the regime might work for a straightforward company.
The full non-statutory Guidance for registered and unregistered companies, SEs, LLPs, and eligible Scottish partnerships (‘Guidance for Companies’) is over 100 pages long and includes template forms of notices involved. We provide here only an outline of the regime and reference should be made to the full guidance and underlying laws for further information and legal advice sought where appropriate.
The legislation sets out five specified conditions by which a person may have significant control over a company. The conditions will, for instance, catch persons having control of more than 25% of the company or controlling more than 25% of the voting rights of a company. Where two or more persons collectively have the relevant interest, they will all be caught in certain circumstances. In the case of a trust in the chain of ownership, the trustee will normally be regarded as the person with significant control, but it is possible that the beneficiaries may be considered to be significant controllers in certain circumstances.
The regulations deal separately with certain other entities (including LLPs) in view of the different nature of the forms of business and more information on the differences are given in the Guidance for Companies available from this link.
One condition that is subjective and potentially broad (the others are fairly objective) is that the person has the right to exercise, or actually exercises, ‘significant influence or control over the company’. There is statutory guidance on the meaning of ‘significant influence and control’ for companies, for LLPs and for relevant Scottish Partnerships available from this link.
Before the PSC regime was introduced, companies only needed to record the immediate, legal owners of their shares. Under the PSC regime, put at its simplest, they now have to look through that, and through however many layers of ownership there are above that, to identify relevant persons who ultimately have significant control of the company. The requirement is to ‘take reasonable steps to identify’ every person who has, directly or indirectly, significant control over the company and the company must keep a register of certain of the relevant people.
Relevant people includes individuals and, in some cases, companies. The position where there are companies in a chain of control can be complicated and reference should be made to the BEIS Guidance for Companies in particular section 2.2 of the Guidance, available from this link for more information, including illustrations.
The Act contains detailed provisions of steps the company must or may take to obtain relevant details. In particular it must send notice to anyone whom it knows or has reasonable cause to believe to be a registrable person requiring that person to confirm the position. Companies could, therefore, be expected to give notice to any shareholders holding more than 25 per cent. of the shares, by way of example. A company may also give notice to a person if it knows or has reasonable cause to believe that the person knows the identity of a significant controller (or knows someone likely to have that knowledge).
What constitutes ‘reasonable steps’ will depend on the circumstances of any case, but given the sanctions applicable for breach, a company may be inclined to err on the side of caution, even though this could, except in the most straightforward of cases, result in a substantial amount of work.
The company’s PSC register should never be blank; if there are no PSCs or information is still being sought, this fact must be recorded. The regime also seeks to identify the nature and extent of control and there are detailed provisions on what information is required in this respect.
Breach of these provisions by the officers of the company is a criminal offence with the sanction of fines or imprisonment.
A significant controller is also required to notify the company of his interest (and when required to confirm his interest to the company). Breach is an offence and may also result in loss of rights in the company associated with the interest.
Persons receiving notices from the company outlined above are required to respond appropriately and failure to respond appropriately following a bona fide request is an offence. There is an exception for legally privileged information. BEIS has published informal guidance for significant controllers available from this link.
The company is also required to file the information on significant controllers with Companies House within 14 days after any change in the company's PSC register. In the case of an individual, that individual’s name, month and year of birth, nationality and service address will be publicly available, together with details of the interest concerned. Where a company elects to keep its registers at Companies House, the day of birth will also be disclosed. The residential address will be available from Companies House (along with the full date of birth) only to credit reference agencies and certain public authorities (eg for law enforcement), unless it is also the service address in which case it will be disclosed as noted above.
A company’s PSC register is open to public inspection, subject to application to court that a request is not for a ‘proper purpose’. There is a regime for suppressing all information relating to PSCs, or preventing their residential addresses from being shared with credit reference agencies in exceptional circumstances, where there is a serious risk of violence or intimidation