Companies and 'persons with significant control'
UK company law already requires certain information on company directors and the registered legal owners of company shares to be made publicly available. One of the aims of the Small Business, Enterprise and Employment Act which passed into law earlier in the year is to ensure that it is clear to anyone doing business with a private company who really controls that business - its 'beneficial owners'.
This will be achieved by requiring UK companies to:
- maintain and keep open for public inspection a register of persons with significant control (PSC)
- file PSC information at Companies House (together with an annual 'check and confirm' process which will replace the annual return).
The expected implementation dates are for companies to keep a PSC register from April 2016 and to file with Companies House from June 2016.
Apart from companies already subject to similar requirements (such as listed companies), every UK company will be required to take reasonable steps to identify every individual who has, directly or indirectly, significant control over the company. It is envisaged that the PSC regime will be extended to LLPs through secondary legislation. If the company does not take reasonable steps to identify PSCs the company and its directors could be guilty of a criminal offence.
A PSC will be any individual who has an interest in more than 25% of the shares or voting rights, or who otherwise exercises control over the management. This includes where the 25% interest is held individually or jointly, for example as one of a number of members of a firm that is not a legal person. There are provisions for establishing if an individual has control via a trust or fund.
A PSC will be required to notify the company of their interest (or to confirm their interest to the company). In addition, a company may require any person who it believes knows the identity of a significant controller (or knows the identity of someone likely to have that knowledge) to provide relevant information.
Although this legislation imposes further burdens on companies and some individuals, there is an advantage for all businesses dealing with companies in that it will be possible to check who really controls the company.
If you would like any help to steer you through this potentially complex legislation, please contact us.