If you operate your business through a company, recent changes have come into force and there are further changes on the horizon that have or will soon impact the way you conduct your business administration. The Small Business, Enterprise and Employment Act 2015 (SBEEA), is aimed at increasing corporate transparency and providing greater flexibility for companies when dealing with Companies House. One of the measures introduced by SBEEA is that, from 6 April 2016, companies will be required to maintain a register setting out the identity of those that hold significant control over the company (PSC Register). The register must be made publically available; either at the registered office or at Companies House.
A PSC is defined as:
Companies and other entities may also be considered to be PSC’s in certain circumstances.
What has not yet been made completely clear is what circumstances or behaviour will constitute significant influence or control. However, draft guidance from the Secretary of State says that:
There will no doubt be more commentary available on the question of what circumstances or behaviour will constitute significant influence or control as the practice of holding PSC registers develops.
There is a duty on companies to investigate, update and obtain information in relation to their PSC Registers. There is also a duty on potential PSC’s to provide information to the company.
Once identified, certain information must be recorded, including:
The government has stated that it intends to issue regulations that require companies to include the following on the PSC Register:
This is the approach taken in the draft PSC regulations.
A company can impose sanctions if its PSCs do not comply with their disclosure obligations (e.g. loss of voting rights and transfer restrictions). Criminal penalties may also apply to those that breach the rules (e.g the company, its directors, company secretary and PSCs), including in some circumstances imprisonment.
You need to consider and address the following:
It is important to keep registers up to date; not only to avoid sanctions, but also from a practical perspective.
A prospective lender will insist upon inspecting the register and any inaccuracies or omissions are likely to cause unnecessary delay to the transaction in question. Ensuring that you have compliant registers now should avoid an increased administrative burden later down the line at what may be a critical time for the business.
Although this article focuses on the impact on companies, it is important to note that there are similar provisions requiring LLPs to also keep a PSC register.