UK company law already requires certain information on directors and registered legal owners of company shares to be made publicly available but new legislation means that anyone doing business with a private company can see who really controls that business – its ‘beneficial owners’.
The Small Business, Enterprise and Employment Act requires UK companies to:
• maintain and keep open for public inspection a register of Persons with Significant Control (PSC)
• file PSC information at Companies House together with an annual ‘check and confirm’ process which will replace the annual return.
The expected implementation dates are for companies to keep a PSC register from April 2016 and to file with Companies House from June 2016.
Apart from companies already subject to similar requirements (such as listed companies), every UK company will be required to take reasonable steps to identify every individual who has, directly or indirectly, significant control over the company. The PSC regime is expected to be extended to LLPs through secondary legislation. If the company does not take reasonable steps to identify PSCs, the company and its directors could be guilty of a criminal offence.
A PSC is any individual with an interest in more than 25% of the shares or voting rights, or who otherwise exercises control over the management. This includes where the 25% interest is held individually or jointly, for example as one of a number of members of a firm that is not a legal person. There are provisions for establishing if an individual has control via a trust or fund.
A PSC will have to notify or confirm their interest to the company. In addition, a company may require any person who it believes knows the identity of a significant controller (or the identity of someone likely to have that knowledge) to provide relevant information.
Although this legislation imposes further burdens on companies and some individuals, the advantage for all businesses dealing with companies is that it will be possible to check who really controls the company.
If you would like advice or guidance on this potentially complex legislation, please contact your RfM advisor.