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persons with significant control - more changes on the way

21 November 2016

Since April 2016 UK limited companies have been required to keep a new statutory register – a register of people with significant control (known as a PSC register). This captures information about who ultimately controls such companies or otherwise exercises significant influence over them. The information contained in a company’s PSC register must be made publicly available at Companies House when a company’s confirmation statement (formerly annual return) is filed.

Many companies are still getting to grips with this new requirement – and now by virtue of the EU Fourth Money Laundering Directive (4MLD) – which (as things stand) is scheduled to be implemented in EU member states by 26 June 2017 – there are more changes on the way that will affect the UK’s PSC regime. Brexit will not impact on the initial implementation of this Directive – whilst the UK remains a full member of the EU it must continue to apply EU legislation.

The Department for Business, Energy and Industrial Strategy (BEIS) has recently issued a discussion paper on the transposition of Article 30 of 4MLD relating to the beneficial ownership of corporate and other entities. The UK’s PSC regime is consistent with most of the requirements of Article 30 of 4MLD, but will need amending in certain respects in order to be compliant.

BEIS considers that changes may be needed in the following areas:

  • The scope of the entities required to obtain and keep PSC information: it is proposed that the scope of the PSC regime will be extended to all entities incorporated in the UK and capable of having a beneficial owner. BEIS is also considering whether companies with shares admitted to trading on certain markets (such as AIM) should be within the scope of the PSC regime – they are currently excluded. Co-operative and community benefit societies, building societies, friendly societies, CIOs and Royal Chartered Bodies and others might also find themselves within the scope of the PSC regime following the outcome of the discussion paper
  • Who is regarded as a beneficial owner and what information needs to be collected: it is proposed that the current significant control tests will remain and will simply be adapted to fit with the structure of any new entities brought within the scope of the PSC regime
  • The frequency with which information about PSCs has to be updated at Companies House: a new obligation is proposed – this would require all entities to update their PSC information within six months of a change occurring (rather than annually via the confirmation statement as is currently the case). This proposal is in response to the requirement in 4MLD that the central register is “adequate, accurate and current” – it was not considered that an annual filing requirement would satisfy this. This will result in an additional administrative burden on entities caught by the PSC regime and seems contrary to the domestic “red tape challenge” which has sought to ease company administration.

For new entities subject to the PSC regime it is proposed that information on beneficial ownership will be publicly accessible in a similar manner to that of the PSC register (at Companies House).

It is also envisaged that the legal offences and penalties which currently relate to the domestic PSC regime should apply to the new entities brought within the scope in order to ensure consistency.

The deadline for responses to the discussion paper is 16 December 2016; we will publish a further update once the outcome of this is known.

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The content on this page is provided for the purposes of general interest and information. It contains only brief summaries of aspects of the subject matter and does not provide comprehensive statements of the law. It does not constitute legal advice and does not provide a substitute for it.

Emma Grant

Emma Grant

Professional Development Lawyer

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