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People with significant influence or control of UK entities
From 6 April 2016, UK companies and Limited Liability Partnerships have been required to investigate “People with Significant Control” (PSCs) in them and “Relevant Legal Entities” (RLEs), and to keep a register of their details. This is part of the UK implementation of the G20 High Level Principles of Beneficial Ownership Transparency.
The PSC register has to be open for inspection (subject to certain protections) and information from it will have to be included in each company or LLP’s annual confirmation statement from 30 June 2016 (which replaces the submission of annual returns to Companies House).
PSCs themselves will be under a duty to ensure that their details are included on the registers of companies and LLPs over which they have control. There are criminal sanctions for both companies and LLPs, and for PSCs, who fail to comply with the new regime.
Certain publicly traded companies already subject to similar transparency requirements (such as those listed on the Main Market of the London Stock Exchange, or traded on its junior AIM market) will be exempted from the requirements, though their subsidiaries and other interests may fall within the new regime. All companies and LLPs within the regime have had to keep a PSC register since 6 April, even if it simply states that they do not have any PSCs.
The PSC regime is effectively the first stage in the UK’s implementation of the beneficial ownership register mandated by the European Fourth Money Laundering Directive (“MLD4”), which has to be implemented by member states by June 2017. MLD4 will extend the scope of the regime to all corporate and legal entities and for example will require a greater level of information in relation to trust structures. The UK is not proposing to implement these additional measures until 2017, following further consultation.
In the meantime, the UK is considering the transparency of beneficial ownership for companies based outside of the UK, but which are active in certain ways within the UK (and so fall outside of the PSC regime).
In a written statement on 26 January 2016, Baroness Neville-Rolfe (Department for Business, Innovation and Skills) said that the PSC regime “…is an important step in providing much greater transparency about who owns UK companies and LLPs. This will boost trust in UK businesses, and reduce the risk of UK companies and LLPs being used for corrupt purposes.”
Privacy is not always driven by corrupt purposes, and many perfectly legitimate structures within the UK will fall within the new regime, in respect of which information will have to be made public. Those who have specifically avoided public company ownership and adopted ‘private’ company and trust structures may therefore be surprised to find additional ownership details being tracked in a public register.
This is a potentially difficult regime for those involved, especially for those with legitimate but more complex ownership or control structures. We have therefore both been involved in the consultation process to develop the legislation and guidance and also in helping our clients navigate through the intricacies of the new regime.
You will find some basic questions and answers on the key elements of the regime below. We will also continue to publish links here to more focussed guidance on particular aspects of the regime and issues that we think will be of wider interest as practice develops; see for example below our case study highlighting particular points for quoted companies to consider.
Due to the complexity of the new regime, the government has also released both statutory and non-statutory guidance. The latter (in summary and long form) is a useful starting point for getting to grips with the new requirements and can be found by clicking here, together with the statutory guidance (which deals specifically with the meaning of “significant influence and control”). There is now separate non-statutory guidance aimed specifically at individuals who may be PSCs, which can be found through the same link.
For more information, please contact David Hicks on +44(0)2074276647 or at firstname.lastname@example.org