Little over a year has passed since the introduction of the register of people with significant control (the PSC Regime), which was designed by the Government to increase transparency as to the ultimate beneficial ownership of corporate entities.
New legislation has now come into force (although most of the changes will not take effect until 24 July 2017) to ensure the PSC Regime complies with the EU Fourth Money Laundering Directive.
What has changed?
As well as an expansion of the PSC Regime to cover unregistered companies and certain listed companies, the following important changes have also come into force.
Notifying Companies House
Limited companies and Limited Liability Partnerships (LLPs) are now required to update their PSC register within 14 days of any change, and then file the change with Companies House within a further 14 days. A change will include, for example, a change to a PSC's residential address, or where a person or relevant legal entity ceases to be a PSC because its shareholding in the company reduces to below 25%. Failure to comply with these requirements constitutes a criminal offence.
Scottish limited and general partnerships
The Scottish Partnerships (Register of People with Significant Control) Regulations 2017 expand the PSC Regime to cover:
- Scottish limited partnerships; and
- Scottish general partnerships made up of exclusively corporate partners (known as Qualifying Partnerships under The Partnerships (Accounts) Regulations 2008),which are known together for the purpose of the PSC Regime as Eligible Scottish Partnerships, or ESPs.
ESPs which are in existence before 24 July 2017 must now identify and register their PSC(s) (or a holding statement if the details remain unconfirmed) at Companies House by 7 August 2017. ESPs coming into existence from 24 July 2017 will have to register their PSC(s) at the time of first registration with Companies House.
Unlike limited companies and LLPs, ESPs are not required to maintain a PSC register. Therefore any change to their PSC(s) must be filed at Companies House within 14 days of the change.
A PSC in relation to an ESP is any individual or "relevant legal entity" who meets one or more of the following conditions:
- directly or indirectly holding rights over more than 25% of the surplus assets on a winding up; or
- directly or indirectly holding more than 25% of the voting rights; or
- directly or indirectly holding the right to appoint or remove the majority of those involved in management; or
- otherwise having the right to exercise, or actually exercising, significant influence or control; or
- holding the right to exercise, or actually exercising, significant influence or control over the activities of a trust or firm which is not a legal entity, but would itself satisfy any of the first four conditions if it were an individual.
For further information on identifying a relevant legal entity, and more generally on the PSC Regime, please see our guidance note here.
Potential future changes
Whilst not forming part of the recent changes, there is a possibility that the PSC Regime will be extended in the future to apply to a wider group of corporate structures, including Open-ended Investment Companies. We will provide further updates on this if more information becomes available.
What you should do
For entities which are to be newly subject to the PSC Regime, they should take steps now to review corporate structures and governance documents, identify PSCs, and send notices to them where required.
All entities should ensure that their compliance function is up to date on the changes, and that record keeping and administrative functions are sufficient to comply with the new filing deadlines.
Disclaimer
The material contained in this article is of the nature of general comment only and does not give advice on any particular matter. Recipients should not act on the basis of the information in this e-update without taking appropriate professional advice upon their own particular circumstances.
