Since 6 April 2016, unlisted UK companies and LLPs have been required to identify individuals who have significant interests in their shares, and publicly disclose their details in a "PSC Register". The regime was expanded in June 2017 to bring other entities, including AIM companies, Scottish limited partnerships and some Scottish general partnerships within scope. Failure to comply carries criminal penalties.
These obligations derive from the 2013 G8 agreement to make it harder to use corporate structures to hide criminal activity, and the relevant legislation has recently been updated to comply with the new beneficial ownership register requirements of the EU Fourth Money Laundering Directive (MLD4) by the Information about People with Significant Control (Amendment) Regulations 2017 and the Scottish Partnerships (Register of People with Significant Control) Regulations 2017 (the "2017 Regulations"). The PSC Register provisions are not straightforward, and impose a considerable administrative burden on many companies, particularly corporate groups with complex ownership structures. Individuals with significant shareholdings also need to assess whether they have obligations to notify their interests.
The table below outlines the key obligations under the PSC regime. Existing private companies and LLPs should have been keeping a PSC Register since April 2016 (or incorporation, if later), but should note the new, more onerous, updating and filing requirements introduced by the 2017 Regulations. Entities which are newly in scope of the regime should note the timings and transitional provisions described in "Changes under the 2017 Regulations" below.
At a glance:
Who is caught by the regime?
The PSC regime applies to all UK companies other than listed companies, which are exempt as they are already subject to transparency obligations under the FCA's Disclosure and Transparency Rules (or their relevant overseas equivalent). In this context, "listed" only means companies listed on the Official List and those with voting shares admitted to trading on a regulated market in another EEA state, or certain markets in the US, Japan, Switzerland or Israel). Since the 2017 Regulations took effect on 26 June 2017, the exemption has not applied to companies quoted on markets such as AIM or the NEX Exchange Growth Market and therefore such companies will be required to keep a PSC register from 24 July.
The unlisted subsidiaries of exempt listed companies are not themselves exempt. LLPs are subject to the PSC regime via separate regulations, and the 2017 Regulations expand the regime to cover additional types of entities, including Scottish limited partnerships, Scottish general partnerships whose partners are all corporate bodies (together "Eligible Scottish Partnerships") and unregistered companies.
The Government has issued non-statutory guidance for companies and other entities on their PSC obligations, and separate guidance for PSCs themselves. This is in addition to the statutory guidance for companies, LLPs and Eligible Scottish Partnerships on the concept of "significant influence or control" which is key to the PSC regime – see below.
Changes under the 2017 Regulations
The PSC regime came into force on 6 April 2016, so all UK unquoted companies and LLPs should already be maintaining a PSC register. Following the implementation of the 2017 Regulations, however, there are more onerous updating and filing requirements. Companies will now be required to update their PSC information on the central register within 14 days of updating their own register. Changes to a company's own register must be made 14 days from confirmation of the relevant change (for PSCs) or 14 days from the date when the company receives details of the change (for RLEs).
To the extent that, as at 26 June 2017, changes had been made to an existing company's register and not filed at Companies House on its last confirmation statement, the 2017 Regulations gave such a company 14 days to file details of that change. Where previously PSC information was filed at Companies House upon incorporation and then with each annual "confirmation statement", changes must now be filed within the timelines set out above on Forms PSC01 to PSC09.
Entities such as AIM companies which are newly subject to the regime will, from 26 June 2017, have to take reasonable steps to ascertain who their PSCs are, and maintain a PSC Register from 24 July 2017 (for more detail on what "reasonable steps" means, see below under "Duty to identify PSCs/RLEs"). The company should enter its PSC information (or a statement as to the status of its investigations) within 14 days of 24 July. Any entries in the PSC register (including any entry stating that the company has no PSCs or is still completing its investigations) should be filed within 14 days of making the entry.
Eligible Scottish Partnerships are now required to identify their PSCs (from 26 June 2017) and register their PSC information at Companies House within a period of 14 days from 24 July 2017. They are not required to maintain their own PSC register.
Who, or what, is a "PSC"?
A PSC in relation to a company1 is an individual who:
- holds, directly or indirectly, more than 25% of a company's shares (Condition 1)
- holds, directly or indirectly, more than 25% of a company's voting rights (Condition 2)
- holds, directly or indirectly, the right to appoint or remove a majority of the company's directors (Condition 3)
- has the right to exercise, or actually exercises, significant influence or control over the company (Condition 4) or
- where shares or rights in a company are held by a trust or partnership which meets one of these conditions, an individual who has the right to exercise, or actually exercises, significant influence or control over the trust or partnership may also be a PSC in relation to the company (Condition 5).