If you operate your business through a limited company, a recent change in company law means that, from 6th April 2016, you are now required to maintain a ‘persons with significant control’ (PSC) register which is filed at Companies House and is open to public inspection.
Under the new regulations you must:
- Identify the people with significant control over the company and confirm their information
- Record the details on the company’s own PSC register
- Provide this information to Companies House as part of the annual Confirmation Statement (formerly the Annual Return) from 30 June 2016, and update the register on an ongoing basis.
Companies must look beyond the individuals who immediately own their shares, in order to identify those individuals or entities which ultimately have significant control of the company. The regulations define a PSC as someone who:
- either directly or indirectly holds more than 25% of the shares in a company; or
- either directly or indirectly holds more than 25% of the voting rights in a company; or
- has the right to appoint or remove a majority of a company’s board of directors; or
- exercises, or has the right to exercise, significant influence or control over the company; or
- 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.
The company must notify any people or entities that it believes are registrable as a PSC, and allow them one month to provide confirmation of their position. Any individual who knows, or ought reasonably to know, that they should be registered is also required to notify the company of their interest.
Information on the company’s own PSC register must be updated on an ongoing basis. Under the new ‘check and confirm’ process, which replaces the Annual Return, companies will supply a confirmation statement affirming whether the information remains up-to-date. Failure to comply with the new rules could potentially result in significant financial penalties and a criminal conviction.
We will be reviewing whether the above applies to each of our clients, but meanwhile we encourage anyone who feels that they are required to make a return to contact us to clarify their position.