The PSC Register: Briefing Note

Written on 1 Mar 2016

What is the PSC register?

It is a statutory register which names and contains information on the individual(s) who ultimately control UK companies and LLPs.

Companies and LLPs must maintain the register from 6 April 2016. The information on the register must be provided to Companies House from 30 June 2016, as part of the filing of the Confirmation Statement (which has replaced the Annual Return).

The register forms part of a G8 commitment towards greater transparency in corporate structures, with the aim of combatting money laundering, terrorist financing and tax evasion. Whilst the UK is the first major jurisdiction to implement a public beneficial ownership register, the concept forms part of the Fourth Money Laundering Directive which will need to be implemented across the EU by June 2017.

Who has to keep a register?

All UK companies and LLPs have to maintain their own PSC register. This includes companies and LLPs which are wholly-owned subsidiaries or dormant.

The only exception is for certain publicly listed companies; that is those:

  • subject to Chapter 5 of the UK Financial Conduct Authority’s Disclosure and Transparency Rules (this includes AIM and Main Market companies); or
  • with voting shares admitted to trading on a regulated market in the EEA or on specified markets in the USA (including NASDAQ and the NYSE), Switzerland, Japan and Israel (these markets are specified in Schedule 1 to The Register of People with Significant Control Regulations 2016).

A UK place of establishment (i.e. the UK branch of an overseas company) is not a UK company and so does not have to keep a PSC register.

From 30 June 2016, private companies and LLPs will be able to choose for their register to be kept by Companies House, rather than keeping it themselves at their registered office or alternative inspection location.

Who has to go onto the register?

In the vast majority of cases, it is easy for a company or LLP to identify who exercises significant control over it, if anyone. But companies or LLPs with more complex ownership arrangements, for example private equity or venture capital backed companies, may not have an easy task.

There are three groups of people who have to go on the register:

  • People with significant control
  • Registrable relevant legal entities
  • Government bodies

People with significant control

The register must record any individual who exercised significant control – whatever their nationality or residency.
An individual (X) is a person who exercises significant control over a company or LLP if he or she meets any one of the following five conditions.

                    Company                        LLP
1 X holds, directly or indirectly, more than 25% by nominal value of the company’s issued share capital. X holds, directly or indirectly, rights over more than 25% of the surplus assets of the LLP on a winding up.
2 X holds, directly or indirectly, more than 25% of the voting rights in the company. X holds, directly or indirectly, more than 25% of the voting rights in the LLP.
3 X holds the right, directly or indirectly, to appoint or remove a majority of the board of directors of the company. X holds the right, directly or indirectly, to appoint or remove a majority those involved in the management of the LLP.
4 X has the right to exercise or actually exercises significant influence or control over the company. X has the right to exercise or actually exercises significant influence or control over the LLP.
5 The trustees of a trust or the members of a firm that is not a legal person meet any of the other specified conditions (in their capacity as such) in relation to the company, or would do so if they were individuals AND X has the right to exercise, or actually exercises, significant influence or control over the activities of that trust or firm. The trustees of a trust or the members of a firm that is not a legal person meet any of the other specified conditions (in their capacity as such) in relation to the LLP, or would do so if they were individuals AND X has the right to exercise, or actually exercises, significant influence or control over the activities of that trust or firm.
Conditions

There are specific provisions relating to indirect holdings through chains of entities, interests held through trust arrangements, joint interests and arrangements, nominee arrangements, interests held by way of security, rights exercisable only in certain circumstances and limited partnership interests.

A company or LLP may have more than one PSC or it may have no PSCs.

Registrable relevant legal entities (RLEs)

Where any of the PSC conditions are satisfied by a legal entity, rather than an individual, that legal entity must be put onto the register if:

(a)   it a relevant legal entity (RLE) – that is, if it holds its own PSC register, if it is subject to Chapter 5 of the UK Financial Conduct Authority’s Disclosure and Transparency Rules (this includes AIM and Main Market companies) or if it has voting shares admitted to trading on a regulated market in the EEA or on specified markets in the USA (including NASDAQ and the NYSE), Switzerland, Japan and Israel (these markets are specified in Schedule 1 to The Register of People with Significant Control Regulations 2016); and

(b)   it is the first RLE in the ownership chain.

These are known in the legislation as “registrable RLEs”. Companies and LLPs do not have to look beyond the first registrable RLE in the chain to identify the PSCs behind that RLE.

In this way, PSCs can be tracked through chains of companies/LLPs but PSC information will not have to be repeated in the register of each subsidiary in the chain.

Governmental bodies

The following organisations are treated as individuals and so are deemed to be PSCs if they meet any of the PSC conditions:

(a)   a local or national government or government department of a country or territory or a part of a country or territory;

(b)   an international organisation whose members include two or more countries or territories (or their governments); and

(c)   a corporation sole (a legal entity consisting of a single incorporated office occupied by a single person) e.g. the Crown.

Can a PSC prevent his or her information going on the register?

Individuals who believe they are at serious risk of violence or intimidation as a result of their PSC registration can apply to court for their information not to be made available to the public. This applies in a very small minority of cases.

Individuals who simply find it uncomfortable to have their connection to a particular company or LLP to be revealed, for example where the company or LLP works in a sensitive sector or where the individual is a newsworthy person, need to take advice about restructuring their holdings.

What information will be on the PSC register?

The information to be recorded on the register depends on whether the information relates to an individual PSC, a registrable RLE or a governmental body.

                     PSC            Registrable RLE          Governmental body
Name Name Name
Address (service AND usual residential) Address (registered or principal office) Principal office
Country of residence Legal form of the entity Legal form of the person
Nationality Law by which the entity is governed Law by which the person is governed
Date of birth The register in which it appears and its registration number (if applicable)
Date on which they became a registrable person Date on which it became a registrable RLE Date on which it became a registrable person
Nature of his or her control Nature of its control Nature of its control
Any restrictions on the disclosure of that person’s information

There is prescribed wording which must be used on the register to describe the nature of the person’s control (these are set out in the Register of People with Significant Control Regulations 2016 and the Limited Liability Partnerships (Register of People with Significant Control) Regulations 2016).

How is the PSC register made public?

Companies and LLPs have to file the information which is on its PSC register at Companies House with their Confirmation Statement, which must be filed at least every 12 months, from 30 June 2016. The register held by Companies House is freely searchable online.

Companies House will suppress the PSCs usual residential address and day of birth, unless the company or LLP has elected for its PSC register to be held by Companies House, in which case, the public online register will reveal the PSCs full date of birth, though the usual residential address will still be suppressed. All of the details of a registrable RLE and governmental body will be viewable.

Also, the register held by the company or LLP at its registered office or the alternative inspection location which it has notified to Companies House is available for public inspection and copying. An inspection or copy of the company or LLP’s own register will reveal the full date of birth of the PSC, but the PSCs usual residential address will still not be disclosed. Again, all of the details of a registrable RLE and governmental body will be viewable.

The company or LLP can charge a fee of £12 for each copy of the register it is asked to provide. A company or LLP can challenge a request for inspection or copy by application to court on the basis that the request has not been made for a proper purpose.

How does a company or LLP collect the information it needs?

Every company and LLP has a duty to take reasonable steps to identify its PSCs and registrable RLEs and obtain the information about them which it needs to put on the register. This includes reviewing the documents and information already in its possession and writing to individual or entities to ask them for the information it needs.

A PSC (or someone acting with the PSCs knowledge) must confirm the information about him or her before it is entered on the register. A registrable RLE does not have to confirm the information before it is entered.

There is also a duty on someone who has significant control to tell the company or LLP of that fact and to provide the information required for the register. They must do so within one month of obtaining control.

How is PSC information updated?

The company or LLP must record changes to information on the register (including if someone has stopped being a PSC or registrable RLE) and the date on which the change occurred as and when it is informed of them. A PSC (or someone acting with the PSCs knowledge) must confirm the change and date before it is entered on the register. A registrable RLE does not have to confirm the change before it is entered.

If the company or LLP has reason to believe a change has occurred but needs more information, it must give notice to the PSC or registrable RLE to ask for the information it needs. The notice must be served as soon as reasonably practicable.

If the company or LLP has elected to keep its PSC register at Companies House, it must make the necessary filing to update the PSC information held by Companies House. Otherwise, it must update the information at Companies House the next time it files a Confirmation Statement.

If a company or LLP makes a mistake and enters incorrect information on the register, it should correct the mistake immediately. If the incorrect information has been recorded on the register held by Companies House, the company or LLP should file a corrections notice but the incorrect information will still be viewable on the central public register even after the correction has been made.

What happens if a PSC does not provide or confirm his or her information?

The register can never be blank. There are prescribed statements which the company or LLP must include on the register whilst it is carrying out its investigation (these are set out in the Register of People with Significant Control Regulations 2016 and the Limited Liability Partnership (Register of People with Significant Control) Regulations 2016).

If an individual or entity fails to respond to a notice requesting information, the company or LLP is able to serve a restrictions notice over their interest. Once a restrictions notice is in force:

  • The restricted interest cannot be transferred (except on application to court for sale order);
  • No rights can be exercised in respect of the interest (for example, no voting rights could be exercised in respect of restricted shares);
  • No payment may be made in respect of the interest, except on a liquidation (for example, no dividends or returns of capital may be paid on restricted shares); and
  • In the case of a company, no further shares may be issued in respect of the interest (for example, no bonus shares could be issued).

A company or LLP is not obliged to issue a restrictions notice as part of the process of taking reasonable steps but if it chooses not to, it must be able to justify its decision.

In addition, failure to comply with the legislation is a criminal offence. A PSC who fails to tell the company of that fact, or an individual or entity who receives a notice from a company investigating the identity of its PSCs who fails to respond to that notice, is liable on conviction to a maximum of 2 years imprisonment and/or a fine.

What happens to the company or LLP if it fails to comply?

Failure to comply is a criminal offence. If a company or LLP fails to keep a register, the company and every officer or the LLP and every designated member (as appropriate) are liable on conviction to a maximum fine of £1000.

If a company or LLP fails take reasonable steps to find its PSCs and registrable RLEs or give notice to keep their information up to date, the company and its officers or the LLP and its designated members (as appropriate) are liable on conviction to a maximum of 2 years imprisonment and/or an unlimited fine.

Where can I get further guidance?

Osborne Clarke has a series of updates including guidance for specific sectors to help them comply with the new regime on its website.

The Government has published guidance on its website including statutory guidance on the meaning of “significant Influence or control”, summary guidance and detailed guidance for companies and LLPs.

The legislation underpinning the PSC register regime is set out in:

Also helpful for LLPs is: