From 6 April this year most UK companies and LLPs will need to identify and record the people who own or control them on a "register of people with significant control" (a "PSC register"). From 30 June 2016, they will also have to file this information on the public register at Companies House.
The rules are aimed at achieving transparency of the individuals who control companies and who previously might not have been identifiable because they sat behind opaque corporate or trust structures. Non-compliance is a criminal offence.
These new rules come into force in the next few months. Looking further ahead, however, the government is also in the early stages of a consultation on whether foreign companies that wish to buy land or property in England and Wales should be under a similar obligation to keep a PSC register.
Definition of a "PSC"
A person with significant influence or control of a company ("PSC") is an individual who meets one or more of the following conditions:
- holds, directly or indirectly, more than 25% of the shares;
- holds, directly or indirectly, more than 25% of the voting rights;
- holds, directly or indirectly, the right to appoint or remove the majority of the board;
- has the right to exercise, or actually exercises, significant influence or control; or
- holds the right to exercise, or actually exercises, significant influence or control over a trust or firm which would satisfy one of the first four conditions if it were an individual.
A company subject to the PSC regime must:
- take reasonable steps to identify any PSCs in relation to the company and confirm certain information about them;
- record the details of the PSC(s) on the company's register;
- file their information annually with Companies House; and
- update the information on its own PSC register when the information changes and update the information at Companies House in its annual filing.
The PSC information that must be entered on the company's PSC register includes the individual's name, date of birth, nationality, residential address (although this will not be public) and the date on which they became a PSC, along with details of the relevant PSC condition(s) that are met.
Individuals who are PSCs in relation to a company are themselves under a corresponding duty to notify the company of their status and to respond to any notices from the company seeking confirmation of their status.
What about overseas companies investing in UK property?
The PSC regime in its current form will only apply where there is a UK company or LLP in the relevant group structure. As mentioned above, however, the government is now consulting on plans to force foreign companies buying property in England and Wales to keep a similar register of people with significant control.
The tentative plan is to set up a separate register recording the PSCs behind foreign companies who wish to do business in the UK. Each foreign company on that register would be allocated a company number, which it would have to quote when applying to be registered as the new owner of real estate. The new rules would eventually be extended to cover existing proprietors too, as well as companies bidding for large public sector contracts.
In our view this is a far-reaching proposal which will affect both honest investors who value their privacy and those with something to hide.
If you would like to discuss compliance with the PSC regime generally or have particular concerns regarding the confidentiality of details that are likely to become public under the PSC regime, please do not hesitate to get in touch with your usual Mishcon contact.