Trust, transparency and the new PSC regime: are you ready for April 2016?

In light of the introduction of the new PSC Regime,Bryan Rickman, Corporate and Commercial solicitor at Keystone Law, looks at the implications of this new regime for UK companies and LLPs.

This guide explains the criteria that define ‘People with Significant Control’ as well as the steps that must be taken to comply with the new legislation and avoid heavy sanctions.

From 6 April 2016, most companies and LLPs will be required to keep a “PSC Register” listing “People with Significant Control” (“PSCs”) and “Relevant Legal Entities” (“RLEs”). PSCs are individuals with significant control over the company or LLP. RLEs are legal entities that meet the conditions for being a PSC and certain other conditions.

This is a new additional duty applying to UK companies limited by shares (including dormant companies), companies limited by guarantee, community interest companies, societas europaea and LLPs. It does not apply to companies which report under Chapter 5 of the Disclosure and Transparency Rules (e.g. Official Listed and AIM traded companies) (“DTR5 Companies”).

From 30 June 2016, this information will also need to be delivered to Companies House in the annual confirmation statement (replacing the annual return). The information will therefore be publicly available.

Failure to comply with these new requirements is a criminal offence, punishable by fine and/or up to two years’ imprisonment.

This guide is an overview to help you prepare for the new regime. However, it is just a summary, so please refer to the latest government guidance and please note that the government is still updating and clarifying the guidance. This guidance includes (i) details on the requirements overall in the government guidance; and (ii) details of the meaning of “significant influence or control” in the draft statutory guidance for companies and the draft statutory guidance for LLPs.

If you have any questions on this guide or would like our assistance in setting up your PSC Register, we would be pleased to advise.

1. What do you have to do to comply with the PSC Regime?

a. Set up the PSC Register by 6 April 2016 and identify any PSCs and RLEs

b. The “reasonable steps” to take to identify any PSCs and RLEs

c. Ensure the information about PSCs is “confirmed”

d. Get in contact if you are a PSC

e. If you haven’t completed this by 6 April 2016

f. Further reporting and updates

2. What is a PSC?

i. Directly or indirectly owns more than 25% of the shares in the company (or for LLPs holds rights over more than 25% of the surplus assets on a winding up).
ii. Directly or indirectly holds more than 25% of the voting rights in the company (or the LLP).
iii. Directly or indirectly holds the right to appoint or remove the majority of the board of directors of the company (or for LLPs the majority of those in management).
iv. Otherwise has the right to exercise, or actually exercises, significant influence or control.
v. 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 itself satisfy any of the first four conditions if it were an individual.

3. What is an RLE?

4. What is the meaning of “significant influence or control”?

5. What is the meaning of “indirectly”?

6. What information must be included on the PSC Register?

7. Further points of note

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This article is for general information purposes only and does not constitute legal or professional advice. It should not be used as a substitute for legal advice relating to your particular circumstances. Please note that the law may have changed since the date of this article.

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