PSC Regime - action required
People with significant influence or control of UK entities.
PLEASE NOTE: the PSC Regime changed with effect from 26 June 2017. Click here to read our recent update outlining the changes.
Since 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. With effect from 26 June 2017 the requirements were extended to unregistered companies and certain Scottish partnerships and the scope of the exemption available to publicly traded companies reduced; with a four week transitional period (see our update via the link above).
The PSC register has to be open for inspection (subject to certain protections) and information from it has to be provided to Companies House within 14 days of entering or updating information in the PSC register.
PSCs themselves are under a duty to ensure that their details are included on the registers of companies and LLPs (and other entities within scope) over which they have control. There are criminal sanctions for both companies and LLPs (and other entities within scope), 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, but no longer including those traded on its junior AIM market) are exempted from the requirements, though their subsidiaries and other interests may fall within the new regime. All entities within the regime have to keep a PSC register, even if it simply states that they do not have any PSCs.
The bigger picture
The PSC regime is part of the UK’s implementation of the beneficial ownership register mandated by the European Fourth Money Laundering Directive (“MLD4”), which had to be implemented by member states by 26 June 2017.
The UK is also 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). We were involved in the recent BEIS call for evidence on effectively extending the PSC regime to overseas legal entities that own UK property or participate in UK government procurement (which closed on 15 May 2017), and will provide further updates as those proposals develop.
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.”
The issue of privacy
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 has 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.
Guidance on the PSC 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 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 separate non-statutory guidance aimed specifically at individuals who may be PSCs, which can be found through the same link. The guidance has been updated to take account of the changes made to the regime with effect from 26 June 2017.
Questions & Answers
Below are a number of questions and answers which provide a useful summary of key elements of the regime:
- Who is affected?
- What do I do next if I am affected?
- What if I have not confirmed who my PSCs are?
- What is a PSC?
- What is a “Relevant Legal Entity”?
- What if rights are held by more than one person jointly?
- What does “indirect” mean?
- What does significant influence or control mean?
- How does the regime deal with interests held through trusts?
- What information needs to be included on the PSC register?
- What information from the PSC register is made public?
For more information, please contact David Hicks on +44(0)2074276647 or at firstname.lastname@example.org
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