New register of company controllers
Changes to UK company law have imposed new obligations on UK companies, as well as those holding interests in them.
Companies are now required to produce a register of ‘persons with significant control’ – commonly known as a PSC-register – which contains details of the ultimate beneficial owners of the business.
The information needs filing with Companies House where it is held in a public register and is designed to improve the level of transparency of UK companies.
But what is meant by ‘significant control’?
The definition of a person with significant control is any person to whom one or more of the following points applies:
The individual either directly or indirectly holds more than 25 per cent of the shares in a company.
The individual either directly or indirectly holds more than 25 per cent of the voting rights in a company.
The individual has the right to appoint or remove a majority of a company's board of directors.
The individual exercises, or has the right to exercise, significant influence or control over the company.
The individual exercises, or has the right to exercise, significant influence or control over the activities of a trust or firm which is not a legal entity, and which itself meets one of the above conditions.
For more companies with pretty simple or straightforward structures, the new requirements are relatively pain free, but others with more complex arrangements where issue of ownership is unclear, a situation may be more challenging.
The new legislation demands that companies are required to take all reasonable steps to identify whether a person or legal entity has significant control and to include relevant details relating to them in the PSC register.
That means companies may have to look beyond people who immediately own their shares and to identify anyone who has significant control of the company. Failure to comply with the new rules could potentially result in financial penalties or criminal conviction. Other changes to company law include amendments to the filing requirements of companies with Companies House, which came into force in June. The annual return will be replaced by the new‘ check and confirm’ process, in which companies will supply confirmation that information is up to date. Any changes must be filed at least every 12 months. If you would like to know more about how these changes could affect your company, contact Rawlinsons on 01733 568321. We produce compliance statements for companies to ensure they are meeting their legal obligations.