Have you taken reasonable steps to identify persons with significant control over your company?
Charitable companies limited by guarantee and community interest companies are now legally required to hold and maintain a register of people with significant control (a “PSC Register”). The PSC Register will need to be updated and delivered annually to the central public register at Companies House when making a Confirmation Statement (which replaces the Annual Return). These rules do not apply if you are a Charitable Incorporated Organisation (CIO).
My company is limited by guarantee – Is it required to hold a PSC register?
Yes. Companies limited by guarantee who are registered in the UK are required to hold and maintain a PSC register.
How do I know if there is a person with significant control over my company?
An individual will be considered to have significant control over your company if they meet one or more of the conditions listed below:
Condition 1
Directly or indirectly holding more than 25% of your company’s shares
Condition 2
Directly or indirectly holding more than 25% of your company’s voting rights
Condition 3
Directly or indirectly holding the right to appoint or remove the majority of the board of directors
Condition 4
Having the right to exercise, or actually exercising, significant influence or control over your company
Please note that “control” and “significant control” are not the same. A person will have “control” over your company if they can direct the activities of your company. However a person will have “significant control” over your company if they can ensure that your company generally adopts the activities which they desire.
How do I know if my company has a Registrable Relevant Legal Entity?
A PSC by definition is an individual. However, if your company is owned and controlled by a corporate legal entity, that legal entity’s details must be recorded on the PSC Register if it is both relevant and registrable in relation to your company. These are referred to as registrable “Relevant Legal Entities” (RLEs). A legal entity is relevant if it:
- Would have been classed as a person with significant control, had it been an
individual; and - Has to maintain its own PSC register, or is otherwise subject to disclosure and transparency rules or has voting shares admitted to trading on a regulated market.
A relevant legal entity is then registrable if it is the first relevant legal entity in your company’s ownership chain.
What steps am I required to take to determine whether there are any PSCs or RLEs over my company?
You are required to take reasonable steps to determine whether there are any PSCs or RLEs in respect of your company. “Reasonable steps” include (but are not limited to) a review of available and existing information such as the Register of Members, shareholder/ member agreements and/or voting patterns to determine whether one of more or the specified conditions are met by any person.
Once you identify people who could be deemed to have significant control in respect of each company, you should then:
- Contact these people, or others who might know them, to confirm they meet one or more of the conditions (see above) and obtain the relevant information to go on the PSC Register.
- Once you obtain this information, put the information on your PSC Register.
- Ensure that the information on the PSC Register is kept up to date.
No PSCs or RLEs have been identified – Is my company still required to hold a PSC Register?
Yes. It may be that, having taken “reasonable steps”, you have not been able to identify a PSC or registrable RLE,
however you will still need to hold a PSC Register to note that fact.
If you are still working through your reasonable steps, this must be made clear on the Register as well as, where appropriate, including the stage you have reached.
Where do I need to keep my company’s PSC Register?
The PSC Register will need to be kept at the company’s registered office (or other inspection address for the statutory books) and be available for public inspection. Anyone (an individual or organisation with a proper purpose) may have access to your PSC Register free of charge, or have a copy of it for an additional fee.
What is the consequence for failing to take reasonable steps to identify a PSC or RLE?
A company could be committing an offence and could be fined. Also, officers of the company who are in default could be committing a criminal offence and could be fined and/or imprisoned.
Click here to read the newsbrief in full
Continue reading other articles: Charities and social enterprise update; IT is no longer a luxury; Material variations; Social Care Advice Line; What not to wear; How to have your cake and eat it; New strategic partnership with ACEVO