The latest statutory 'register requirements

All UK companies are required to keep up-to-date statutory registers, including a register of directors, register of shareholders, and a register of charges, but in an attempt to increase corporate transparency, from 6 April 2016, the government introduced the need for all UK companies and limited liability partnerships (LLPs) to maintain a register of people with significant control (PSC register).

This requirement was brought in as part of the provisions of the Small Business, Enterprise and Employment Act 2015 (the Act). The new register is governed by sections 81 and 82 and schedule 3 of the Act. Schedule 3 also inserts new parts 1A and 21A into the Companies Act 2006.

PSC register

The PSC register is a register of people and legal entities that have 'significant control' of a company (including dormant companies, companies limited by guarantee, and those registered as charities) or LLP. The PSC register is not a requirement for companies trading on a regulated market.

From 6 April 2016 all existing relevant UK companies and LLPs now have to maintain a PSC register and have it available for inspection. Companies incorporated after 6 April 2016 will need to include PSC information on their incorporation. From 30 June 2016, a copy of the PSC register must be sent to Companies House with each company's new confirmation statement and then updated on each filing of a confirmation statement.

Confirmation statement

A confirmation statement is the new format of an annual return. Each company will file its first confirmation statement on its usual annual return filing date, which falls on or after 30 June 2016. Each company must then file a confirmation statement at least once a year, but a company can file the confirmation statement more often (for example, on any change of shareholding) if required. The filing date is a rolling year from the date of the previous filing.

There will be an annual fee (irrespective of how many filings are made) but the amount of the fee is yet to be confirmed. The payment period will remain as the date of the first confirmation statement filing and therefore it will be possible for a company to have two separate periods - one for annual payment and one for filing the confirmation statement (if its filing period changes). Every company will get reminders for both periods. The confirmation statement will mean that non-traded companies will no longer have to submit details of their shareholders to Companies House each year, provided that there have been no changes.

Person with significant control

A person with significant control is an
individual who:

• Holds directly or indirectly more than 25 per cent of the shares in a company;

• Is entitled directly or indirectly to exercise more than 25 per cent of the voting rights in a company;

• Is entitled directly or indirectly to appoint or remove the majority of the board of directors of a company;

• Has the right to exercise or actually
  exercises significant influence or control over
  a company; or

• Has the right to exercise significant influence or control over the activities of a trust or firm that meets any of the first four conditions in relation to a company, or would do so if that trust or firm was an individual.

The threshold is more than 25 per cent,
so a 25.0 per cent shareholding will not amount
to significant control (unless one of the other conditions is met) but a 25.01 per cent shareholding is sufficient.

A relevant legal entity may also constitute a person with significant control if it is a UK company or LLP that holds shares in a company and would have satisfied any of the criteria if it had been an individual.

The PSC register only applies to registerable relevant legal entities. This includes all UK companies and companies in jurisdictions with similar obligations to the PSC legislation, but excludes companies registered in jurisdictions which do not have similar legislation and listed companies trading on a regulated market that are subject to their own market disclosure requirements.

This can throw up some complicated questions where shares in a company are:

• Held in joint names;

• Subject to any nominee arrangements;

• Held by another company registered overseas;

• Held in a complicated group structure; or

• Held in a trust.

If shares are held jointly by two or more people, if two people have an arrangement to vote as a block, or if a person acts as a nominee for another person, each of them must be entered into the register as a PSC if at least one of the conditions is met. If a trust meets one or more of the conditions, the entry into the register must be of the person who has significant control of the trust (usually the trustees) and not the trust itself or the beneficiaries of the trust.

Company obligations

• It is imperative that all organisations identify all persons with 'significant control' as per the guidance as soon as possible. This may not always be clear and organisations must therefore take the necessary steps to identify such persons (and evidence the steps that they have taken);

• Each organisation must take reasonable steps to identify and contact those individuals who have been identified as PSCs of the company or LLP to confirm their details for inclusion in the register;

• The relevant information must be recorded on the PSC register from 6 April 2016. A company or LLP cannot simply have a blank PSC register. It must confirm who the PSCs are and all their relevant details (or if these are not yet identified, it must indicate that steps are
  being taken to ascertain details of all PSCs). Alternatively, if there is no one with significant control, it must contain a statement to that effect. The official wording contained in the legislation must be used in both cases until all PSCs are identified and all their relevant details recorded;

• From 30 June 2016, a copy of the PSC register must be filed with Companies House along with the confirmation statement; and

• There is an obligation to constantly monitor the PSC information and actively maintain and update the register throughout each year, and update the information at Companies House at least once a year along with the confirmation statement.

Information to be recorded

For an individual, their name, service address, residential address, nationality, and date of birth must be included, and for a registerable relevant legal entity, its name and registered office.

For both individuals and relevant legal entities, the date on which they became a registerable PSC in relation to the company in question and the nature and extent of their control over the company in question must be recorded.

For this section again the specific wording in
the legislation and accompanying guidance
must be used.

Obligations of individuals

All individuals who believe that they have significant control over a company or LLP (based on the criteria) should be advised to volunteer this information to the relevant company or LLP and provide the necessary details to be listed on that company's PSC register.

Penalties for non-compliance

Failure to comply is an offence which, on conviction, can result in a maximum of two years' imprisonment, an unlimited fine, or both. Further, if a company's officers do not take reasonable steps to identify individuals or relevant legal entities that should be entered in the PSC register, or identify changes concerning existing entries in their register, they may also be guilty of an offence punishable by up to two years' imprisonment, an unlimited fine, or both, and an offence is also committed by the company in these instances.

Individuals who are served with a notice asking whether they are a person who may be registerable on a company's PSC register must comply with the same within a month or again
an offence is committed, following which the company can impose sanctions on the person failing to provide the information. This can include prohibiting a transfer of their shares, removing their voting rights, or preventing any dividends being paid to them.

Debbie King is a partner at Farleys @FarleysLaw www.farleys.com