NI Companies Required to Disclose Details of Persons with Significant Control
Register of Persons with Significant Control
Recent legislative changes mean that with effect from January 2016 every UK private and public company (subject to certain exemptions in the case of public limited companies) will be required to maintain a register of persons having significant control of the company (a PSC register). Whilst not currently the case, it is expected that the requirement to create and maintain a PSC register will be extended to limited liability partnerships also with effect from January 2016.
The introduction of the PSC register is part of a series of legislative changes which seek to achieve greater transparency of control within companies and to deter, identify and sanction those who hide their interest in UK companies, particularly where they may do so to facilitate illegal activities.
The PSC register will be open to public inspection and available online for public viewing at Companies House from April 2016 onwards. In place of an annual return, companies will from April 2016 be obliged to “check, notify changes if necessary and confirm” the information at Companies House at least once every 12 months.
Each company must keep the PSC register at its registered office (or such other address as notified to Companies House) and make this available for inspection. Alternatively, companies will be permitted to elect to maintain their PSC register (along with other statutory registers) at Companies House on what is to be called the “central register”.
What does it mean to have “significant control”?
The PSC register should include required particulars of all persons with significant control (PSC) save where those PSCs are classed as "non-registrable".
An individual may be deemed to have significant control of a company if any one of the following statements is correct:
- The individual holds, whether directly or indirectly, more than 25% of the company's shares
- The individual holds, whether directly or indirectly, more than 25% of the voting rights for the company
- The individual holds, whether directly or indirectly, the right to appoint or remove the majority of the board of directors of the company
- The individual has the right to exercise, or actually exercises, significant influence or control over the company
- The individual has the right to exercise, or actually exercises, significant influence or control over the activities of a trust or firm and the trustees of that trust or members of that firm satisfy any of the four conditions above, or would do so if they were legal persons.
Where individuals or legal entities have control only by virtue of having control over another legal entity, these individuals or entities are classed as non-registerable, but may be noted in the PSC register as a "relevant legal entity" (RLE). This avoids repetition on every level of the corporate chain. To give an example, a shareholder in a holding company may exercise significant control over a subsidiary through the holding company but would not need to be registered in the subsidiary’s PSC register. Instead, the holding company will be noted in the subsidiary’s PSC register as a ‘relevant legal entity’ and the shareholder in the holding company would be noted in the holding company’s PSC register as a person with significant control.
Obligations on the company
In addition to maintaining the PSC register as set out above, each company will be subject to a duty to take reasonable steps to investigate and obtain and keep up-to-date information about each person whom they know, or suspect to be, a registerable PSC or RLE.
Where the company has not previously been formally notified, it will be required to serve notice on any individual, trust or company that it knows or suspects to be a registerable PSC or RLE seeking confirmation in this regard. Notices may also be served on third parties (e.g. bank employees, accountants and lawyers) suspected of being aware of the existence of a PSC or RLE. Notice requirements similarly exist in respect of changes to the status of the PSC or RLE.
Any company, and its officers, which fails to comply with these new legislative requirements may be guilty of a criminal offence.
Obligations to supply information
A proactive disclosure obligation is placed on all the people who may be deemed to be a PSC or RLE of a company. The PSC or RLE may have their shareholder rights suspended or be forced to transfer ownership of their shares if information is withheld – such sanctions may be enforced by the company without first seeking court approval.
Protections for the personal details of persons with significant control
There are various controls in place which seek to protect the personal details of individual PSCs. In addition to the exclusion of individuals’ usual residential address and full dates of birth from the public register, persons seeking disclosure of details on the PSC register will be required to state the purpose for which the information is to be used. However, there is no requirement that the person requesting access state whether they intend to disclose the information to any other person.
If the company feels the request is improper (or will be used improperly in any way) it can apply to the courts to prevent disclosure. Any such applications must be made within 5 days of the disclosure request.
For further information in relation to the PSC register, the meaning of “significant control” or the new obligations on the company and/or persons with significant control, please do not hesitate to contact Sarah Sistern of A&L Goodbody.