What are the changes to ‘The Persons with Significant Control’ regime and how will they affect my business?
The Persons with Significant Control (“PSC”) regime was first introduced on 6th April 2016 under the Small Business, Enterprise and Employment Act it requires certain companies to file information about their ownership and management which is contained in their PSC register at Companies House. A more onerous obligation of reporting ownership changes has now been introduced.
Companies House changes
The PSC regime changed on 26 June 2017 when the provisions of the EU’s Fourth Money Laundering Directive (“4MLD”) were implemented into UK law. Despite the UK’s current PSC regulations satisfying most of the 4MLD requirements, amendments are still required at UK level to ensure full compliance.
The changes to the PSC regime mean that a company will no longer use the annual filing of the confirmation statement to inform Companies House of changes to its PSC Register. Changes must be reported within 28 days. This gives the company 14 days to update its register and a further 14 days to file the relevant forms. The intention of the 4MLD is to make Companies House database up to date and promote event driven filing, as with a large number of other Company House filings.
Where a change to PSC information prior to 26 June has not yet been notified to Companies House (e.g. by submitting a further CS01 confirmation statement), a relevant entity must notify Companies House of that change within 14 days of 26 June 2017 by using forms PSC01 to PSC09 (or the equivalent forms for LLPs, LLPSC01 to LLPSC09). Paper versions of each of these forms are available on Companies House’s website.
The company’s PSC register should, of course, already have been updated.
Common changes that companies will now need to report directly to Companies House, as well as updating the PSC register, include:
- the emergence of a new PSC, RLE or other registrable person – for example, if someone buys shares in the company and their ownership exceeds 25% of the company’s share capital for the first time;
- changes in specified details of a PSC, RLE or other registrable person – for example, a PSC changes their residential address or an RLE company changes its name;
- the nature of an existing PSC’s control over the company changes – for example, they move between different shareholding “tiers” by buying or selling shares;
- someone ceasing to be a PSC or RLE – for example, they sell shares so that they now hold 25% or less of the company’s shares or voting rights.
The annual confirmation statement will continue to include PSC information and companies will have to confirm in that statement that the PSC information is correct.
Who will be subject to the new regime?
The PSC regime will now be extended to all UK companies other than those listed on the Main Market of the London Stock Exchange (“Main Market”). The current regime applies to all UK companies except those that are subject to rule 5 of the Disclosure Guidance and Transparency Rules (companies on the Main Market and the Alternative Investment Market (“AIM”) (“DTRS Companies”) and those that are listed on a regulated market in another European Economic Area (EEA) state or on a market in Israel, Japan, Switzerland or the USA. Partnerships and limited partnerships, including those in Scotland, are also currently excluded.
Currently, DTR5 companies are excluded from the PSC regime as they are already subject to an existing framework of disclosure and transparency obligations. This changed at the end of June 2017 when only companies listed on a regulated market in the UK (that is the Main Market) are now exempt. Companies listed on AIM will have to contend with the dual burden of complying with the PSC regime as well as the significant shareholder reporting obligations contained in the AIM Rules and DTR5.
Previously exempt Scottish bodies will also be affected. Unlike their English equivalents, both Scottish limited partnerships and Scottish general partnerships have separate legal personality. From 24 July 2017, they will become subject to the PSC regime and will have to register details of the people with significant control over them.
While great care has been taken in the preparation of the content of this article, it does not purport to be a comprehensive statement of the relevant law and full professional advice should be taken before any action is taken in reliance on any item covered.
