New ownership reporting rules for UK Private Companies & LLPs

In this article, Rouse Partners’ Company Secretarial Manager, Rory Haines, looks at the new rules and how companies can ensure that they comply.

What are the new reporting rules for people with significant control?

From April, non-listed companies, LLPs and any organisations or firms maintaining the statutory registers on their behalf, must take reasonable steps to identify and record the people who own or control the company.

In addition, from that date, such UK companies and LLPs have to establish and maintain a register of this information. This will be in addition to existing registers such as the registers of directors and members.

Additional Companies House filing required from June

Furthermore, as from 30 June 2016, the information contained within the PSC register will have to be filed at Companies House as part of the new confirmation statement. This is set to replace the annual return and will be available for public inspection. Newly incorporated companies will have to supply this information at the time of their incorporation.

The process is not as simple as merely replicating the shareholders’ information. The company must instead go through a strict process to highlight all of the individuals who exert significant control within the company.

Using the above criteria, a person would indirectly hold more than 25% of the shares if there was an arrangement between say 3 shareholders, who own 10% each. This highlights the need to examine your shareholdings and any formal or non-formal arrangements instead of relying just on share numbers.

Rouse Partners’ Company Secretarial Manager commented, “In deciding who is a person with significant control, you should examine your register of members, articles of association, all known agreements between shareholders and changes to such items. In practice, the difficulty may well come when judging those with indirect control and ensuring that your register is kept fully up-to-date.”

What information will need to be added to my PSC register?

The information required to be entered in a company’s PSC register for each qualifying individual is:

• Name
• Service address
• Country in which they are usually resident
• Nationality
• Date of birth
• Usual residential address
• Date on which they became a registrable person
• Nature of his/her control over the company and if there are any restrictions on using or disclosing any of the individual’s PSC particulars.

What should I do now?

Companies should write to PSC individuals asking whether they hold their interest on their own behalf or for someone else (and if so, that person’s contact details) to obtain the necessary information to complete the PSC register.

Where there is an ownership chain of corporate entities, whether incorporated in the UK or overseas, you will be required to enquire along the ownership chain to establish whether there are any individuals who meet the above conditions. Such individuals will therefore qualify as a PSC of the UK company and their details will have to be entered on the PSC register of the UK company.

PSC individuals are legally obliged to contact the company within a month of becoming a PSC if they believe they should be on the register, but are not yet. A failure to do so will constitute a criminal offence.

In summary

It is important that both companies and potential PSCs understand their new legal obligations and how to comply with them. A failure to do so could result in criminal liability. If in doubt, it seems prudent for PSC individuals to contact companies they believe they may exert significant control over, as opposed to risking criminal liability.