The UK government has today published a consultation on proposed changes to the “people with significant control” (PSC) register regime which are necessary to implement the 4th Money Laundering Directive (4MLD). The government intends to implement the 4MLD notwithstanding the outcome of the EU referendum. The changes to the PSC regime are currently expected to take effect from 26 June 2017. The UK’s current PSC register regime came into force on 6 April 2016. Click here for our dedicated PSC register regime microsite.
This consultation is running in parallel with HM Treasury’s consultation to implement the 4MLD which will include a beneficial ownership register for trusts. Click here for our blog post on the proposed regime for trusts.
Proposed extension of scope
The scope of the PSC register regime will be extended to cover:
- Scottish Limited Partnerships;
- Scottish Partnerships, each of whose members is a limited company
- Open-Ended Investment Companies (OIECs)
- European Co-operative Societies (SCE)
- Investment Companies with Variable Capital (ICVCs)
- Unregistered Companies subject to the Unregistered Companies Regulations 2009. This includes some Royal Chartered bodies (City of London Livery Companies, Guilds and other societies and professional bodies, but not universities or overseas based bodies).
The government considers that it may also be necessary to extend the regime to AIM companies or those admitted to the ISDX Growth Market and is seeking views on this. This is because the 4MLD allows an exemption for companies listed on regulated markets (such as the Main Market of the London Stock Exchange) but does not expressly also exclude companies listed on prescribed markets.
Certain other entities (building societies, credit unions, friendly societies, cooperative societies, community benefit societies and charitable incorporated organisations) will also be brought within scope but will only have to place information on the record where they do actually have a beneficial owner.
Helpfully, the government has confirmed that overseas companies with a UK establishment (such as a place of business or a branch) will remain out of scope.
The entities within scope will have to record PSC information in the same way as UK companies and LLPs do now, but with any modifications which are required to the conditions as would be necessary.
Frequency of returns to Companies House
The 4MLD requires information held on the PSC register to be “current”. Under the present PSC register regime, companies need only report their information to Companies House every 12 months (as part of a company’s Confirmation Statement). The government considers that this does not meet the 4MLD’s requirement for the information to the “current” and so has proposed a new obligation to update the information within 6 months of any change to an entity’s PSC(s). This new obligation would be applied alongside the obligation to file the Confirmation Statement.
Access to information
As with the present regime, the government proposes that new entities within scope will need to file their PSC information at Companies House and that information will be publicly accessible online.
At present a PSC’s day of the date of birth and usual residential address are not available on the public record, though that information is recorded on the PSC register and filed at Companies House. In order to comply with the 4MLD, access to this information will be extended to financial intelligence units, competent authorities and other entities which are obliged to carry out customer due diligence. And all PSC information for entities within scope will also be available to law enforcement, without exception.
Osborne Clarke comment
This extension of the PSC regime has been expected, given the requirements of the 4MLD. Nevertheless, it is unfortunate that changes have to be made whilst the UK regime implemented earlier this year is still bedding down.
The extension to Scottish limited partnerships will have a significant impact on the fund management industry which feature Scottish LPs in their fund structures. And the extension to AIM companies seems excessive given the extensive disclosure requirements which already apply to them.