Companies countdown to new transparency regulations

Posted 08/03/2016

Companies are on a countdown to comply with new regulations around transparency of ownership. As part of the Small Business, Enterprise and Employment Act 2015, unlisted UK companies and LLPs will have to identify those people with significant control over them, and to record their details in a new statutory register.

The information must be prepared by 6^th April 2016 and then filed on the public register with Companies House from June 2016, as part of the new confirmation process that replaces the annual return.

The aim of the so-called PSC regime – the acronym refers to ‘people with significant control’ – is to make it easier to find out who is controlling a company and so cut corporate crime. It’s part of a global initiative to tackle misuse of company structures, and will also tie in with the EU’s Fourth Money Laundering Directive requirements, which requires member states to hold a central register showing corporate beneficial ownership.

The PSC register will contain information on individuals who ultimately own or control more than 25% of a company’s shares or voting rights, or who otherwise exercise control over the company and its management. In certain circumstances, it can apply where a trust or firm would satisfy the criteria if it were an individual.

And although compliance will be fairly straightforward for those companies who have simple ownership and control structures, it is more challenging for those with more complex ownership structures, especially if trusts, partnerships or overseas companies are involved.

Joel says: “The guidelines and regulations are still in draft form and further detail on implementation is awaited, but the deadline dates are in place and companies need to be focused on working towards 6^th April.”

“The task of identifying which individuals should be disclosed is complex and most companies are going to need support to be sure they’ve identified their PSCs and prepared the Register correctly, at least first-time round.”

He adds: “Companies are used to providing a register of shareholders, but in many cases this new PSC register will look quite different.”

The requirement of the Register of People with Significant Control Regulations 2016 to maintain a PSC register will apply to all UK private and public companies, other than those publicly traded companies which already report under DTR 5.

The Register must be maintained at the company’s registered office and will be available for public inspection and searchable online via Companies House, although certain personal information that must be provided to Companies House will be suppressed in the public version of the register, for example residential addresses.

Failure to comply will be a criminal act with the possibility of a prison sentence and it’s not enough for companies to say they’re not sure who has the controlling interest, or to have a blank register, as they must take ‘reasonable steps’ to identify and list them. If a company is unable to identify who has control of, say, a holding company, this must be stated in the register.