Persons with significant control: prepare to comply

From 6 April 2016 unlisted UK companies must take reasonable steps to ascertain and record in a dedicated register details of each individual who exercises control or significant influence over the company – known as persons with significant control, or PSCs. The details include the individual’s name, nationality, date of birth and address.

The definition of control seeks to capture all the ways in which an individual could exert significant influence or control, and includes direct or indirect control of 25% or more of the voting rights in the company. Some companies will not have any PSCs; others will have several.

Individuals who are PSCs will be required proactively to notify the company concerned and provide their details to it. It will be a criminal offence for an individual not to comply with the new rules.

From 30 June 2016 companies will have to provide Companies House with details of each PSC annually and, for new companies, on incorporation. Both the register and the information on file at Companies House will be open to inspection by members of the public. Only in certain limited circumstances can some or all of the details about an individual be kept confidential.

The company can impose civil sanctions for non-compliance, which include “freezing” shares so that they cannot be transferred and any rights attached to them cannot be exercised.

UK companies now need to prepare to set up and maintain a PSC register and, where necessary, to send out investigation notices to persons whom they believe to be a PSC or to have information about a PSC. Individuals who are likely to be PSCs should prepare to supply their details to each company in which they are a PSC. Those who may be at risk of violence or intimidation if their details are made public should consider making an application to have their name and other personal information protected from public disclosure.

The PSC regime is part of a package of measures designed to increase transparency about who owns UK companies, and hence to discourage individuals from using UK companies to launder money or carry on other criminal activities. Other measures include the recent prohibition of bearer shares and forthcoming changes to restrict the circumstances when a corporate director can be used.

For further information, CMS Cameron McKenna's briefing note on the PSC regime can be viewed here.

This article first appeared in Law-Now, CMS Cameron McKenna's free online information service, and has been reproduced with their permission. For more information about Law-Now, click here.