New requirements for corporate transparency
Changes to the PSC regime are expected to come into force in June and July of this year pursuant to the European Union Fourth Money Laundering Directive (4th MLD).
The PSC regime
The PSC regime first came into effect in April 2016 and placed an obligation on the vast majority of UK limited companies and LLPs to create and maintain a register of ‘people with significant control’ (PSC). Most commonly known as the ‘PSC register’, this includes details of who ultimately controls or exercises significant influence upon a company. Since 30 June 2016, the submission of PSC register information has formed part of the annual confirmation statement process at Companies House. Therefore, the confirmation statement has become the means by which new PSCs, changes to existing PSCs and anyone ceasing to be a PSC, have become part of the public record at Companies House.
The 4th MLD requires all European Union Member States to put in place central registers of beneficial ownership. As part of the drive for transparency and with the aim of making the UK an attractive place for investment, the UK adopted the PSC regime ahead of the required implementation date imposed by the 4th MLD. Whilst the current PSC regime principally meets the remainder of the requirements as set out in the 4th MLD, there are certain changes that will be necessary to bring the PSC regime fully into compliance.
What does this mean for you and your company?
From 26 June, PSC information will no longer be updated using the annual confirmation statement (form CS01). Instead, to ensure that the central register remains “adequate, accurate and current”, companies will need to report PSC changes as and when they happen using separate individual forms (PSC01 to PSC09, or the equivalent forms for LLPs, LLPSC01 to LLPSC09).
Common changes that companies will now need to report directly to Companies House, as well as update in the PSC register, include:
- Any new PSC, relevant legal entity (RLE) or other registrable person – for example, if someone acquires shares in a company and their ownership exceeds 25% of the company’s share capital for the first time;
- Changes in specified details of a PSC, RLE or other registrable person – for example, a PSC changes their residential address or an RLE changes its name;
- The nature of an existing PSC’s control over the company changes – for example, they move between different ‘shareholding brackets’ by acquiring or disposing of shares; and
- Someone ceasing to be a PSC or RLE – for example, by disposing of shares so that they now hold 25% or less in the company’s shares or voting rights.
In order to ensure that PSC registers provide up to date information, they must be updated within 14 days of a change occurring, and notified to Companies House within a further 14 days. This change emphasises the need for companies and LLPs to be conscious of their ownership structures and to act quickly in relation to any changes. To avoid any threat of penalties, this means companies must always be active in reviewing, updating and chasing potential PSCs for information where necessary and then promptly making the required submissions to Companies House.
Other entities that may be subject to the PSC regime
The scope of the existing PSC regime is being extended to cover all active Scottish Limited Partnerships (SLPs) and also General Scottish Partnerships (SPs) where all of the partners are corporate bodies. From 24 July, it is expected that these entities will be required to keep PSC registers and file PSC information at Companies House.
In addition to this, the government believes it may be necessary for all entities incorporated in the UK and capable of having a beneficial owner to be covered by the PSC regime. Although the 4th MLD is still subject to final confirmation, it may be that the following entities will also fall within the scope of the PSC reporting requirements:
- Unregistered companies;
- Open Ended Investment Companies (OEICs) and Investment Companies with Variable Capital (ICVCs);
- Co-operatives and community benefit societies;
- Building societies, friendly societies and credit unions;
- Charitable Incorporated Organisations (CIOs);
- Certain Royal Chartered Bodies; and
- European Economic Interest Groupings, European Co-operative Societies (SCEs) and European Groupings of Territorial Cooperation (EGTCs).
The exemptions from the requirement to keep PSC registers will also change for UK listed companies. Currently, UK listed companies are exempt from keeping a PSC register if they are subject to the UK’s Disclosure and Transparency Rules. However, under the proposed changes, it is expected that this exemption will be limited to companies traded on an EEA market and certain other specified markets.
Protection for PSC information
There will also be changes to the protection regime afforded to PSCs from public disclosure of their information. Certain PSC information which forms part of the public record, for example the PSC’s date of birth and usual residential address, is currently only accessible by specified public authorities. Following the 4th MLD changes, access will be extended to financial intelligence units, competent authorities and other entities that have an obligation to carry out customer due diligence. All PSC information held on the public record will now also be available to law enforcement agencies with no exceptions.
Hunt & Coombs offer a series of comprehensive company secretarial service packages to help ensure your company remains compliant with administrative requirements. For further information on our company secretarial packages or to speak to someone in relation to the PSC register update please contact the Corporate & Commercial team on 01733 882800 or email [email protected].
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