The Government has confirmed that the proposed new “people with significant control register” will be freely accessible online, and will be searchable by the name of the person with significant control (a “PSC”) as well as by company.
The announcement was made in a discussion paper published by the Department of Business, Innovation and Skills (BIS) yesterday titled “Understanding the new requirements, recording control on the PSC register and protecting people at serious risk of harm”.
For background on the new register – the creation of which will be compulsory for all private UK companies (other than guarantee companies) – see our dedicated microsite here.
Understanding the new requirements: Government will publish guidance
One of the most troublesome aspects of the new requirements will be identifying who is or isn’t a PSC.
There are five qualifying conditions set out in the legislation. One of the conditions is that a PSC is someone who exercises or has the right to exercise significant influence or control. BIS has confirmed that it will be publishing guidance on how to interpret this somewhat circular definition. There will also be guidance on the other conditions of being a PSC, as well on wider questions around the register.
Recording control on the register: no need to disclose confidential information
Various information will have to be recorded on the register; for example, the name of the PSC, her address and so on.
This information will include the nature of the person’s control. The legislation does not go any further to prescribe what information must be included under this heading, but the discussion paper helpfully states that information relating to the way control is held which would normally be kept confidential for commercial or other reasons would not need to be placed in the public domain. This covers, for example, shareholder agreements and trust deeds.
The discussion paper then sets out a variety of methods by which the nature of a PSC’s control could be disclosed. It is likely that a standard Companies House form with a tick box approach will be adopted, similar to Form TR-1 used to notify major interests in shares in listed or traded companies to the Financial Conduct Authority under the Disclosure and Transparency Rules.
Protecting people at serious risk of harm: competition or reputational impact will not be enough
One feature of this new register regime is that all the information on the register, bar the PSC’s usual residential address and day of date of birth, will be publicly accessible from Companies House. However, PSCs will be able to apply to have their PSC information protected from disclsoure if there is a serious risk of harm.
The discussion paper considers what information should be protected and also what should constitute a serious risk of harm. The Government acknowledges that disclosure of a PSC may mean that sensitive information that would be of interest to competitors could be revealed, or that the reputation of PSCs who are disclosed to be involved with controversial companies may suffer. However, BIS’s view is that competition and reputational impact should not be taken into account when deciding whether a PSC is at serious risk of harm.
Next steps: more to follow
The discussion paper is open for comment until 9 December 2014. More will follow in the coming months as the Government puts together the necessary secondary legislation.
Although the Government has said in the past that it hopes to have the primary legislation necessary to implement the register on the statute book by the date of the next general election (7 May 2014), there is no firm guidance as to when companies will have to create their registers. All that the discussion paper says is that the Government “will look to implement the register as soon as practicable once the necessary primary and secondary legislation is in place”.