Since 6th April 2016, nearly all UK companies have been required to maintain a register of Persons with Significant Control (also known as a “PSC register”).
The PSC register obligations were introduced as part of the Small Business Enterprise and Employment Act 2015. The government’s intention was to enhance corporate transparency where complicated ownership structures can sometimes make it difficult to tell who owns and controls companies.
However, even small limited companies with very simple structures are required to maintain a PSC register. And, from 30th June 2016, companies need to file this information with Companies House as part of the new Confirmation Statement (which replaces the Annual Return from this date).
This guide explains to small business owners what a Person with Significant Control is, how to produce a PSC register and what companies need to do to stay on the right side of the law.
Which companies need to maintain a Persons with Significant Control register?
All UK limited companies, limited liability partnerships (LLPs), community interest companies (CICs), public limited companies and unlimited companies must all create and maintain a PSC register.
Both new and existing companies are required to maintain a PSC register. Whether a company is dormant or active it must still maintain it.
Sole traders, ordinary partnerships, limited partnerships (LPs) and Charitable incorporated organisations (CIOs) are NOT required to maintain a PSC register.
Who is defined as a Person with Significant Control (PSC)?
For most small businesses the 3 most likely criteria that would make an individual a Person with Significant Control are as follows:
- Any individual who owns more than 25% of the company’s shares
- Any individual who holds more than 25% of the company’s voting rights
- Any individual who has the power to appoint or remove a majority of the company’s board
If one or more of the above statements is true then that person is defined as a PSC and must be added to the register.
Additional criteria apply for individuals who have the right to exercise significant influence or control over the company or over a trust, and for companies who exert influence or control. You can find the full details of these more complex situations here.
How do I create a PSC register for my company?
The legislation requires companies to take “reasonable steps” to determine whether there are any PSCs and, if so, to identify them.
For the majority of small companies the process of identifying PSCs is straightforward. PSCs are likely to be any of the shareholders of the company who own more than 25% of the company’s shares and no one else.
For example, in a company with just two shareholders who each own 50% of the shares and where the company has adopted the model articles, it will typically be these two shareholders and no one else who will be PSCs.
Tip: Remember that the traditional consideration of an individual with 51% or more of a company’s shares being “the person with control” and individuals with less than 50% not having control, does not apply to the PSC regulations. You only need more than 25% of the shares in issue to count as a person with significant control.
How to get PSCs to confirm their details?
You may have all the required details of your PSCs to hand. However, to fully comply with the new rules you should request each PSC (or individuals you think may be a PSC) to confirm their details.
A formal notice (known as a 790D) is a request from the company to an individual asking them to confirm whether they are a registrable person and the nature of their control over the company. It is an offense for the individual not to reply.
Once the “confirmed” information has been received it can be entered on the register.
If you are unable to identify an individual that you suspect is a PSC then you can serve a 790D request on anyone you believe will know the identity of the PSC. This may include people like solicitors, accountants or family members.
Tip: Remember to update your PSC register to confirm you have sent out a 790D request – even while you wait for the individual to respond.
What to do if the company does not have any PSCs?
It is quite possible for a company not to have any PSCs. For example, a company with 5 shareholders each owning 20% of the shares (and voting rights) is likely not to have any PSCs – although it is important to check all the criteria.
In these cases a general statement must be added to the register to declare the company does not have any PSCs.
Tip: The register cannot be blank – if you are still in the process of reviewing who the PSCs are then a statement to this effect should be added.
What to do if the company does not have shares?
Companies that are limited by guarantee and limited liability partnerships do not have shares or shareholders. These companies must still maintain a PSC register but the criteria relating to shares does not apply in the same way.
What information must be added to the PSC register?
For each Person with Significant Control you need to enter the following information on your PSC register:
- Date of birth
- Country of residence
- Service address (the official address Companies House/HMRC will use for correspondence with the PSC)
- Usual residential address
- The date on which the individual became registrable
- The nature of their control over the company
Tip: For shareholdings and voting rights a number of bandings are defined: more than 25% but less than 50%, more than 50% but less than 75%, 75% or more – and each entry to the register must indicate which banding the PSC falls into.
When to update the PSC register
As you become aware of changes that have (or may have) affected who are PSCs of the company the register must be updated.
For example, if a transfer of shares is made it is possible that there is a new PSC and also that someone who was previously a PSC may no longer be.
Similarly, an allotment of new shares could introduce new PSCs but lead to some existing PSCs no longer meeting the criteria.
Tip: If you believe that a new shareholder may be a PSC the company must contact the individual to ascertain whether they meet the criteria and, if so, to gather the required information to enable them to be entered on the register.
Who is able to see the information in the PSC register?
From 30th June 2016, Companies House will maintain a global register of PSCs that can be publicly inspected.
All UK companies that are required to maintain a PSC register will need to submit this information to Companies House at least once per year. The PSC information is included with the company’s confirmation statement, which replaces the annual return.