UK: Companies Act 2006: People With Significant Control Regime Now In Force

Last Updated: 13 April 2016
Article by David Collins, Richard Barham and Candice Chapman

In a significant change to the UK Companies Act 2006, UK-incorporated companies must now collect and keep information about people with significant control over them. The new rules came into force on 6 April 2016. They apply to all UK companies, other than those that are already subject to the Financial Conduct Authority's Disclosure and Transparency Rule 5 or certain equivalent overseas regimes. They also apply to UK-incorporated LLPs. In this article we focus on the practical steps which companies (and LLPs) should be taking.

For a more general review of the new regime, see our winter 2015/2016 issue.

Duty to keep a register of people with significant control

Every company should now have a register of people with significant control over it (PSC Register). The PSC Register forms part of the company's statutory books. The company must keep its PSC Register with the company's other statutory books at the company's registered office or at the alternative inspection location which the company has notified to Companies House. Failure to keep a PSC Register is an offence. Both the company and any officer who is in default may commit it.

Gathering information for the PSC Register

A company must take reasonable steps to find out whether there are any individuals (PSCs) or relevant legal entities (RLEs) who have significant control over it and meet the criteria for registration. (See the boxes "The conditions for being a PSC" and "The conditions for being an RLE" for a summary of these key terms.)

If a company has been notified that a person is a registrable PSC or registrable RLE and has all the necessary particulars about that person, it may not be necessary to conduct any further information gathering about that person. However, for a PSC (but not an RLE), it is a requirement that the individual has provided the information or that it has been provided with the individual's knowledge.

More generally, the company should send a notice to anyone it knows, or has reasonable cause to believe, is a registrable PSC or a registrable RLE. This should ask them to confirm whether they are or not, to confirm or correct any particulars included in the notice and to supply any that are missing. The company can also serve notice on anyone it knows, or has reasonable cause to believe, can identify a registrable PSC or registrable RLE or knows the identity of someone else likely to have that knowledge.

A recipient must comply with a notice within one month of its date. There is also a separate duty on a registrable PSC or registrable RLE to provide information to the company. This applies if: that person knows or ought reasonably to know they are registrable; their particulars are not on the PSC Register; they have not received a notice from the company; and this has continued for at least a month.

To ensure that information on the PSC Register is always up to date, there are also continuing information gathering duties on the company and continuing notification duties on registrable PSCs and registrable RLEs.

Failure by a company to comply with its information gathering duties is an offence. Any person who fails to comply with a notice from a company or with its own notification duties (or knowingly or recklessly provides false material particulars) also commits an offence. Any officer in default may also be liable.

The conditions for being a PSC

  • An individual who holds, directly or indirectly, more than 25% of the shares in a company;
  • An individual who holds, directly or indirectly, more than 25% of the voting rights in a company;
  • An individual who holds the right, directly or indirectly, to appoint or remove a majority of the board of directors of a company;
  • An individual who has the right to exercise, or actually exercises, significant influence or control over a company;
  • An individual who holds the right to exercise, or actually exercises, significant influence or control over the activities of a trust or firm which is not a legal entity, but would satisfy any of the first four tests if it were an individual.

A company treats an individual as a non-registrable PSC if that individual only holds an interest in the company through having significant control of an RLE. All other PSCs are registrable. There are detailed interpretive provisions on many of these terms. Every situation should be considered on a case-by-case basis.

The conditions for being an RLE

Any legal entity which the company would class as a PSC if it were an individual and:

  • is itself either obliged to keep a PSC Register; or
  • must comply with DTR 5; or
  • is traded either on another EEA Regulated Market or on a specified market in Switzerland, the US, Japan or Israel.

An RLE is registrable unless it only holds an interest in the company through having significant control of another RLE.

Enforcement

A company may serve warning notices on anyone with a relevant interest in the company who has not responded to a notice from the company. A person with a relevant interest is a person who holds any shares or voting rights in the company or has the right to appoint or remove any board member. A warning notice tells that person that the company plans to issue them with a restrictions notice.

If, after one month of the warning notice, the information remains outstanding without a valid reason, the company may serve a restrictions notice. The law does not require the company to do this, but a company should consider whether it is right to do so to meet its duty to take reasonable steps. A restrictions notice disenfranchises the relevant interest in the company. For example, the company cannot pay dividends and no rights may be exercised in respect of the interest. A restrictions notice lasts until the information has been provided or certain other circumstances prevail.

What information must be included on the PSC Register?

A company's PSC Register cannot be empty. A company must always have information about its registrable PSCs or registrable RLEs and/or an update on the state of the company's information gathering on its PSC Register.

Information gathering: The Register of People with Significant Control Regulations 2016 (the Regulations) set out the statements that a company must include on its Register on the progress of its information gathering. For example, while a company is taking reasonable steps to find out if it has any registrable PSCs or registrable RLEs, its PSC Register should state: "The company has not yet completed taking reasonable steps to find out if there is anyone who is a registrable person or a registrable relevant legal entity in relation to the company."

Registrable PSCs: Where the company has identified a registrable PSC the following information about the PSC must be obtained, confirmed and entered on the PSC Register by the company:

  • name;
  • date of birth;
  • nationality;
  • country, state or part of the UK where the PSC lives;
  • service address;
  • usual residential address (though this is protected from public disclosure);
  • the date the individual became a PSC (this is 6 April 2016 for existing companies completing a PSC Register for the first time in April 2016);
  • which of the five PSC conditions the individual meets (using the official wording set out in the Regulations); and
  • any restrictions on disclosing the PSC's information that are in place (see below).

In stating which of the five conditions the PSC meets, the company must, where relevant, quantify the PSC's shareholding or voting rights, by reference to three bands:

  • more than 25% but not more than 50%;
  • more than 50% but not more than 75%; or
  • 75% or more.

The company must not enter any of an individual's particulars in the register until they have been confirmed either by that person or by another person with the knowledge of that person.

Registrable RLEs: Where a company has identified a registrable RLE the following information must be obtained about the RLE and entered on the PSC Register by the company:

  • the name of the legal entity;
  • the address of its registered or principal office;
  • the legal form of the entity and the law governing it;
  • any register in which it appears (including details of the state) and its registration number;
  • the date it became a registrable RLE (this is 6 April 2016 for existing companies completing a PSC Register for the first time in April 2016); and
  • which of the five PSC conditions the RLE meets (using the official wording set out in the Regulations) quantified where relevant by reference to the three bands.

The required particulars must be entered on the Register once the company becomes aware of the entity's status as a registrable RLE. There is no equivalent of the confirmation requirement for individuals.

No registrable PSCs or RLEs: Where a company has taken all reasonable steps and knows or reasonably believes that it has no registrable PSCs or registrable RLEs, it must record that fact on its PSC Register.

Keeping the information up to date: A company must keep its PSC Register up to date by reflecting any relevant changes to its registrable PSCs and registrable RLEs. However, it cannot enter changes about an individual unless they have been confirmed.

Public access to PSC information

As one of a company's statutory books, its PSC Register must be accessible for inspection by any person. Any person can also ask for a copy of the Register. There is a charge of £12 per request. The only information on its PSC Register which a company must not disclose is a PSC's residential address.

The company must always tell the person wishing to inspect or have a copy of the PSC Register of the date when the PSC Register was last updated and whether there are further alterations to be made.

As with requests to inspect the register of members, anyone applying to inspect or have a copy of the PSC Register must provide their name and address and specify their purpose in seeking the information. The company must respond to the request within five working days. In that time it must either comply with the request or, if it believes the request is not for a proper purpose, it can apply to court.

From 30 June 2016, as part of the new annual return regime, companies will have to provide annual information about their PSC Registers to Companies House.

This information will be publicly available, but there will be some safeguards from public disclosure. The day of date of birth and residential address information of PSCs will be subject to the same protections as for company directors and will not be available to the public.

Additionally, if a PSC considers that they or someone they live with would be at serious risk of violence or intimidation through their wider PSC information being publicly available, they can make a protection application to Companies House. A full protection application means that no information about the PSC is publicly available at Companies House or shared by Companies House with credit reference agencies. On the relevant company's PSC Register, a note that a protection application has been made replaces the usual information. Protection starts as soon as an application is made and, if it is granted, the PSC information has indefinite protection.

BIS Guidance

As already mentioned, every UK company within the new regime (and all UK LLPs) should now have a PSC Register and be taking appropriate steps to identify and record their registrable PSCs and registrable RLEs. For some, this will be a straightforward exercise, but for others it may be more complex. The government has produced detailed Guidance on the register of people with significant control to help companies meet their new obligations. The guidance includes the various statutory wordings mentioned above as well as example notices.

Other government guidance on the new regime (for example, specific guidance on the meaning of "significant influence or control") is available from the link below.

BIS webpage: PSC requirements for companies and limited liability partnerships

Dentons is the world's first polycentric global law firm. A top 20 firm on the Acritas 2015 Global Elite Brand Index, the Firm is committed to challenging the status quo in delivering consistent and uncompromising quality and value in new and inventive ways. Driven to provide clients a competitive edge, and connected to the communities where its clients want to do business, Dentons knows that understanding local cultures is crucial to successfully completing a deal, resolving a dispute or solving a business challenge. Now the world's largest law firm, Dentons' global team builds agile, tailored solutions to meet the local, national and global needs of private and public clients of any size in more than 125 locations serving 50-plus countries. www.dentons.com.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

To print this article, all you need is to be registered on Mondaq.com.

Click to Login as an existing user or Register so you can print this article.

Authors
Events from this Firm
28 Sep 2017, Seminar, London, UK

On 26 July the FCA published its long-expected consultation paper on the extension of the SMCR to all FCA-authorised firms. The so-called "core regime" introduces the key concepts of regulator-approved senior managers, firm-approved certification staff and conduct rules applicable to virtually all staff.

3 Oct 2017, Conference, Zurich, Switzerland

As the founding Partner of the Europe-Iran Forum, Dentons Europe will once again support this year’s event. This compelling event which explores all Iran-related topics will take place in Zürich on 3rd and 4th October.

4 Oct 2017, Conference, Munich, Germany

Dentons Global Real Estate Group is delighted to be exhibiting once again at EXPO REAL, the International Trade Fair for Property and Investment which takes place on 4-6 October, 2017 in Munich, Germany.

 
In association with
Related Video
Up-coming Events Search
Tools
Print
Font Size:
Translation
Channels
Mondaq on Twitter
 
Register for Access and our Free Biweekly Alert for
This service is completely free. Access 250,000 archived articles from 100+ countries and get a personalised email twice a week covering developments (and yes, our lawyers like to think you’ve read our Disclaimer).
 
Email Address
Company Name
Password
Confirm Password
Position
Mondaq Topics -- Select your Interests
 Accounting
 Anti-trust
 Commercial
 Compliance
 Consumer
 Criminal
 Employment
 Energy
 Environment
 Family
 Finance
 Government
 Healthcare
 Immigration
 Insolvency
 Insurance
 International
 IP
 Law Performance
 Law Practice
 Litigation
 Media & IT
 Privacy
 Real Estate
 Strategy
 Tax
 Technology
 Transport
 Wealth Mgt
Regions
Africa
Asia
Asia Pacific
Australasia
Canada
Caribbean
Europe
European Union
Latin America
Middle East
U.K.
United States
Worldwide Updates
Check to state you have read and
agree to our Terms and Conditions

Terms & Conditions and Privacy Statement

Mondaq.com (the Website) is owned and managed by Mondaq Ltd and as a user you are granted a non-exclusive, revocable license to access the Website under its terms and conditions of use. Your use of the Website constitutes your agreement to the following terms and conditions of use. Mondaq Ltd may terminate your use of the Website if you are in breach of these terms and conditions or if Mondaq Ltd decides to terminate your license of use for whatever reason.

Use of www.mondaq.com

You may use the Website but are required to register as a user if you wish to read the full text of the content and articles available (the Content). You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these terms & conditions or with the prior written consent of Mondaq Ltd. You may not use electronic or other means to extract details or information about Mondaq.com’s content, users or contributors in order to offer them any services or products which compete directly or indirectly with Mondaq Ltd’s services and products.

Disclaimer

Mondaq Ltd and/or its respective suppliers make no representations about the suitability of the information contained in the documents and related graphics published on this server for any purpose. All such documents and related graphics are provided "as is" without warranty of any kind. Mondaq Ltd and/or its respective suppliers hereby disclaim all warranties and conditions with regard to this information, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. In no event shall Mondaq Ltd and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use or performance of information available from this server.

The documents and related graphics published on this server could include technical inaccuracies or typographical errors. Changes are periodically added to the information herein. Mondaq Ltd and/or its respective suppliers may make improvements and/or changes in the product(s) and/or the program(s) described herein at any time.

Registration

Mondaq Ltd requires you to register and provide information that personally identifies you, including what sort of information you are interested in, for three primary purposes:

  • To allow you to personalize the Mondaq websites you are visiting.
  • To enable features such as password reminder, newsletter alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our information providers who provide information free for your use.

Mondaq (and its affiliate sites) do not sell or provide your details to third parties other than information providers. The reason we provide our information providers with this information is so that they can measure the response their articles are receiving and provide you with information about their products and services.

If you do not want us to provide your name and email address you may opt out by clicking here .

If you do not wish to receive any future announcements of products and services offered by Mondaq by clicking here .

Information Collection and Use

We require site users to register with Mondaq (and its affiliate sites) to view the free information on the site. We also collect information from our users at several different points on the websites: this is so that we can customise the sites according to individual usage, provide 'session-aware' functionality, and ensure that content is acquired and developed appropriately. This gives us an overall picture of our user profiles, which in turn shows to our Editorial Contributors the type of person they are reaching by posting articles on Mondaq (and its affiliate sites) – meaning more free content for registered users.

We are only able to provide the material on the Mondaq (and its affiliate sites) site free to site visitors because we can pass on information about the pages that users are viewing and the personal information users provide to us (e.g. email addresses) to reputable contributing firms such as law firms who author those pages. We do not sell or rent information to anyone else other than the authors of those pages, who may change from time to time. Should you wish us not to disclose your details to any of these parties, please tick the box above or tick the box marked "Opt out of Registration Information Disclosure" on the Your Profile page. We and our author organisations may only contact you via email or other means if you allow us to do so. Users can opt out of contact when they register on the site, or send an email to unsubscribe@mondaq.com with “no disclosure” in the subject heading

Mondaq News Alerts

In order to receive Mondaq News Alerts, users have to complete a separate registration form. This is a personalised service where users choose regions and topics of interest and we send it only to those users who have requested it. Users can stop receiving these Alerts by going to the Mondaq News Alerts page and deselecting all interest areas. In the same way users can amend their personal preferences to add or remove subject areas.

Cookies

A cookie is a small text file written to a user’s hard drive that contains an identifying user number. The cookies do not contain any personal information about users. We use the cookie so users do not have to log in every time they use the service and the cookie will automatically expire if you do not visit the Mondaq website (or its affiliate sites) for 12 months. We also use the cookie to personalise a user's experience of the site (for example to show information specific to a user's region). As the Mondaq sites are fully personalised and cookies are essential to its core technology the site will function unpredictably with browsers that do not support cookies - or where cookies are disabled (in these circumstances we advise you to attempt to locate the information you require elsewhere on the web). However if you are concerned about the presence of a Mondaq cookie on your machine you can also choose to expire the cookie immediately (remove it) by selecting the 'Log Off' menu option as the last thing you do when you use the site.

Some of our business partners may use cookies on our site (for example, advertisers). However, we have no access to or control over these cookies and we are not aware of any at present that do so.

Log Files

We use IP addresses to analyse trends, administer the site, track movement, and gather broad demographic information for aggregate use. IP addresses are not linked to personally identifiable information.

Links

This web site contains links to other sites. Please be aware that Mondaq (or its affiliate sites) are not responsible for the privacy practices of such other sites. We encourage our users to be aware when they leave our site and to read the privacy statements of these third party sites. This privacy statement applies solely to information collected by this Web site.

Surveys & Contests

From time-to-time our site requests information from users via surveys or contests. Participation in these surveys or contests is completely voluntary and the user therefore has a choice whether or not to disclose any information requested. Information requested may include contact information (such as name and delivery address), and demographic information (such as postcode, age level). Contact information will be used to notify the winners and award prizes. Survey information will be used for purposes of monitoring or improving the functionality of the site.

Mail-A-Friend

If a user elects to use our referral service for informing a friend about our site, we ask them for the friend’s name and email address. Mondaq stores this information and may contact the friend to invite them to register with Mondaq, but they will not be contacted more than once. The friend may contact Mondaq to request the removal of this information from our database.

Security

This website takes every reasonable precaution to protect our users’ information. When users submit sensitive information via the website, your information is protected using firewalls and other security technology. If you have any questions about the security at our website, you can send an email to webmaster@mondaq.com.

Correcting/Updating Personal Information

If a user’s personally identifiable information changes (such as postcode), or if a user no longer desires our service, we will endeavour to provide a way to correct, update or remove that user’s personal data provided to us. This can usually be done at the “Your Profile” page or by sending an email to EditorialAdvisor@mondaq.com.

Notification of Changes

If we decide to change our Terms & Conditions or Privacy Policy, we will post those changes on our site so our users are always aware of what information we collect, how we use it, and under what circumstances, if any, we disclose it. If at any point we decide to use personally identifiable information in a manner different from that stated at the time it was collected, we will notify users by way of an email. Users will have a choice as to whether or not we use their information in this different manner. We will use information in accordance with the privacy policy under which the information was collected.

How to contact Mondaq

You can contact us with comments or queries at enquiries@mondaq.com.

If for some reason you believe Mondaq Ltd. has not adhered to these principles, please notify us by e-mail at problems@mondaq.com and we will use commercially reasonable efforts to determine and correct the problem promptly.