Corporate transparency: how can the new PSC register help litigants?
Published on 3rd May 2016
The new “People with Significant Control” (PSC) register will be a valuable resource for litigants. Before commencing an action, it can help to establish whether a defendant is worth suing; and for those looking to enforce a judgment (either domestic or foreign), it can help to identify assets to enforce against.
What is the PSC register?
Since 6 April 2016, all unlisted UK companies and limited liability partnerships have been required to keep a PSC register, recording (or enabling the identification of) all individuals who have “significant control” over them. This might be by owning or controlling 25% or more of the shares or voting rights, having the ability to appoint or remove the majority of the board, or otherwise exercising significant influence or control over the company or LLP.
Companies and LLPs will need to provide that information to Companies House from 20 June 2016, as part of their annual filings. That information is open to public inspection. There are sanctions for company officers that do not comply with these obligations.
How can this be used by litigants?
The PSC register may prove a valuable source of information for judgment debtors looking to trace assets. If any beneficial interests are revealed, English law provides a wide range of tools that can be used to enforce against those interests, in conjunction with remedies such as injunctions to prevent the dissipation of assets.
The PSC register may also be useful for those considering litigation. It can help them to understand before issuing a claim whether the prospective defendant has assets that could be enforced against, if the claim is successful. As well as being a pragmatic step for any prospective piece of litigation, if a claimant is looking to fund litigation using third party funding, funders will look at the enforceability of any judgment before agreeing to provide any funding.
Nevertheless, it remains to be seen how stringent the courts will be in upholding company officers’ duties to obtain information. This could prove a practical barrier to those looking to obtain information about assets using the PSC register. Where arrangements involve complex trust arrangements, evasive and determined debtors may still prove difficult to trace and enforce against.