Last year, the Small Business, Employment and Enterprise Act 2015 introduced a new requirement for the vast majority of UK limited companies and LLPs to create and maintain a register of people with significant control (PSC Register) and to submit their PSC details to Companies House as part of their annual confirmation statement (which replaced the annual return).
However, as part of the implementation of the EU Fourth Money Laundering Directive (‘4MLD’), which took effect today (26 June 2017), the PSC regime is being updated. Under the updated regime, PSC information will no longer be updated annually on the confirmation statement.
Instead, to meet the 4MLD requirement for the central register to be “adequate, accurate and current”, companies and LLPs now need to report any PSC changes to Companies House in "real time" i.e. as and when they happen. As well as reporting any changes to Companies House, entities are still required to themselves maintain their PSC Register.
Accordingly, entities now need to report the following information directly to Companies House, as well as keeping their PSC Register updated:
- The identity of a new PSC, registrable legal entity (RLE) or other registrable person - for example, if someone buys shares in a company and their ownership exceeds 25% of the company’s share capital for the first time.
- Changes in specified details of a PSC, RLE or other registrable person - for example, a PSC changes their residential address or an RLE company changes its name.
- Changes in the nature of an existing PSC’s control over the entity - for example, in the case of a company, they move between different shareholding “tiers” by buying or selling shares.
- Someone ceases to be a PSC or RLE - for example, they sell shares so that they now hold 25% or less of the company’s shares or voting rights.
Entities will need to update their PSC Register within 14 days, and notify Companies House within 28 days, of a change to their PSC information. As explained above, this can no longer be done via the annual confirmation statement. Instead, from 26 June 2017, companies will need to use Forms PSC01 to PSC09 to update their PSC information. There are corresponding new forms for LLPs. As with the other requirements under the PSC regime, failure to comply will be a statutory offence punishable by fines on summary conviction.
In light of the above, please advise as soon as possible of any changes to your company's, or LLP's, PSC details or information since its last confirmation statement was filed or its PSC Register was created. If any changes have taken place, you must update your PSC Register and file the relevant forms at Companies House within 14 days of 26 June 2018 i.e. by 10 July 2018.
Other changes in the pipeline
Previously, all DTR 5 issuers were exempt from the PSC Register requirements. However, this exemption has been narrowed and now only applies to companies having voting shares admitted to trading on a regulated market in an EEA state. Companies with shares traded on certain specified markets in Switzerland, the United States, Japan and Israel, will continue to be exempt.
The effect of this change is that companies with shares admitted to trading on prescribed markets, such as AIM and NEX Exchange (formerly ISDX) will for the first time be required to comply with the PSC Register regime. Under transitional provisions, they have until 24 July 2017 to comply with the requirements.
There are also be changes to the protection regime (whereby companies can apply to have their PSC information withheld from the public register where disclosure would put a person at risk of violence or intimidation) so that credit and financial institutions will be able to access "secured" PSC information, where appropriate.
Companies House has also stated that in the coming year it intends to undertake new work to improve the accuracy and completeness of PSC data. It recognises that for some entities (especially smaller entities), the legislation can appear complex and they need additional support in getting it right. With that in mind, it is going to review its guidance to ensure it is doing all that it can to help entities comply with their responsibilities. It intends to contact those entities with clearly incorrect PSC information to help them complete their record properly. It will also introduce a new mechanism, the "report it now" button, so that viewers who spot potential inaccuracies in a company's PSC information can report this instantly to Companies House. This approach to improving accuracy appears to be more collaborative than punitive, which is to be welcomed bearing in mind that failure to comply with the PSC disclosure duties is a criminal offence.
We will let you know about these and any further changes when the position becomes clearer.