The Small Business, Enterprise and Employment Act (the Act) received Royal Assent on 26 March 2015, but how will the Act affect your limited company or LLP?
This article focuses on the changes which will impact on your statutory books, as the Act introduced a new PSC (persons with significant control) register. This new legal obligation requires you to start to maintain a PSC register of those people who own or have “significant control” over the company/LLP from 6 April 2016.
You must have a PSC register, even if you do not have anything to disclose (and there is standard wording to be inserted if there is nothing to disclose). This information will need to be provided to Companies House when you file a confirmation statement every 12 months from 30 June 2016. The confirmation statement replaces the old annual return.
The PSC register, similar to other statutory registers you are required to keep, will need to be open to the public, made available for inspection at the registered office or SAIL (single alternative inspection location) and registered at Companies House. If you are a private company you can opt to solely maintain your register at Companies House if you wish.
Within the PSC register you will be required to highlight all individuals and relevant legal entities who have significant control and who are ‘registrable’. An individual/legal entity will be non-registrable if their only interest is that they hold significant influence or control over another legal entity that is a registrable person.
Various information in respect of each PSC should be contained within the register, including: the PSC’s name, service address, nationality and date of birth (if an individual), date upon with they obtained control and the nature of their control. As with director's residential addresses a separate register of the PSC’s residential address will be required to be maintained at the registered address if a separate service address has been given.
PSC’s are defined as persons/legal entities who fall into at least one of the categories below:
- holds, directly or indirectly, more than 25% of the shares of the company;
- holds, directly or indirectly, more than 25% of the voting rights of the company/LLP;
- holds the right, directly or indirectly, to appoint or remove a majority of the board of directors of the company;
- has the right to exercise, or actually exercises, significant influence or control over the company/LLP; or
- has the right to exercise, or actually exercises, significant influence or control over any trust or firm (not a legal entity) that has significant control (under one of the other four categories) over the company/LLP.
You will be obliged to undertake reasonable enquiries to determine whether or not anyone is a registrable person/legal entity, and you will need to identify them on your PSC register where appropriate. You must send a notice to all PSC’s identified to ask them to provide the required information. If you fail to investigate the registrable persons/relevant legal entities, or the said registrable persons/legal entities fail to disclose their interests, it can lead to a sanction of imprisonment or a fine.
For a company/LLP formed on or after 6 April 2016 you will need to maintain a PSC register straightaway. For all existing companies/LLPs you will need to maintain a PSC register with effect from 6 April 2016 and provide information to Companies House from 30 June 2016.
We would advise you to consider whether or not you may have any individuals/relevant legal entities holding significant influence or control as soon as possible, so that you have the requisite information to hand ready for the PSC register.
For further information on the new PSC register and what it means for your business, please contact the Corporate Team at Trethowans who will be happy to assist.