Guest blog by, Ian Manson, Digita Product Manager
On 6th April, a commitment to corporate transparency made at the June 2013 G8 summit will become a reality.
The summit was hosted by the United Kingdom at Lough Erne, Northern Ireland and presided over by David Cameron. Its themes were tax evasion and transparency.
One of the commitments, made in David Cameron’s Summit Declaration, was that “Companies should know who really owns them and tax collectors and law enforcers should be able to obtain this information easily.”
The following month the government launched the “Transparency and Trust” discussion paper. This paper sought views on several proposals, including a prohibition on the use of bearer shares, a prohibition on the use of corporate directors and the creation of a central register of individuals having significant influence and control over companies.
Following this consultation, the government published The Small Business Enterprise and Employment Bill in June 2014. It eventually received Royal Assent in March 2015.
Since enactment, the abolition of bearer shares has already been implemented. Abolition of corporate directors is due to come into effect in October 2016. Meanwhile the new register comes into force now.
Almost all UK companies and LLPs will be required to maintain a Register of People with Significant Control, or PSC register for short.
From the end of June 2016, companies and LLPs will have to start reporting the contents of their PSC registers to Companies House to place on the public record.
The register itself must contain the identity details of any person who meets one or more of five specified categories of control.
1. Directly or indirectly holding more than 25% of the shares
2. Directly or indirectly holding more than 25% of the voting rights
3. Directly or indirectly holding the right to appoint or remove a majority of directors
4. Otherwise having the right to exercise, or actually exercising, significant influence or control (as defined in statutory guidance)
5. Having the right to exercise, or actually exercising, significant influence or control over the activities of a trust or firm which is not a legal entity, but would itself satisfy any of the first four conditions if it were an individual.
For limited liability partnerships there are five similar criteria, with items 1 and 2 differing to reflect the nature of an LLP as follows:
1. Directly or indirectly holding rights over more than 25% of the surplus assets on a winding up.
2. Directly or indirectly holding the right to appoint or remove the majority of those involved in management.
A PSC register must never be empty. If the company or LLP has no controllers then the register must contain an entry to that effect.
Companies and LLPs are under an obligation to ascertain whether they have any registrable controllers and register them. Recipients of PSC related enquiries from a company required to co-operate. There is also an obligation on individuals themselves to notify companies of their significant interest or control if they do not hear from the company. Any subsequent changes to controllers’ details, or to the nature of their control, must be also be registered.
BIS have published a number of helpful guidance including a detailed guidance document “PSC guidance for companies, LLPs, and SEs”. This includes specimen enquiry notices and the official wording that should be used for register entries. All BIS guidance is available here:
From 6th April you should be in a position to produce a PSC Register for each of the companies for which you are undertaking this responsibility. Initially it is likely that the only entry in each company’s register will be the following officially worded statement describing the state of the register:
• “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.”
Alternatively one of the following might be appropriate:
• “The company knows or has reasonable cause to believe that there is no registrable person or registrable relevant legal entity in relation to the company”
• “The company knows or has reasonable cause to believe that there is a registrable person in relation to the company but it has not identified the registrable person”
• “The company has identified a registrable person in relation to the company but all of the required particulars of that person have not been confirmed”
Digita Company Secretarial is being enhanced with PSC Register functionality. Version 12.0 will allow you to generate PSC enquiry notices, record controllers with the nature of their control and print the register.
This page can be viewed at https://www.digita.com/pro/blog/index.php/corporate-transparency/
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