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do AIM companies need to comply with PSC requirements?

28 June 2017

Yes, all AIM companies need to maintain a People with Significant Control (PSC) register from 24 July 2017.

The UK implemented the Fourth Money Laundering Directive (4MLD) on 26 June 2017. However UK companies on AIM have a week grace period (until 24 July 2017) before they need to comply with the PSC rules.

From 24 July 2017 all AIM companies must:

  • have a PSC register that is duly completed (for example with details of any registrable PSCs, or a statement that there are none, or a statement that steps are in the process of being taken to find out who they are); and
  • report to Companies House as and when the register is completed. 

This is a new obligation. AIM-listed companies were not originally required to comply with the requirement to keep a new statutory register of ‘persons with significant control’ (PSCs) when these requirements came in on 6 April last year – unlisted companies and LLPs have been obliged to comply with these requirements since that date.

What is a PSC register?

As this will be the first time AIM companies have had to comply with the PSC regime, here is a quick summary of what the requirements are.

The PSC register identifies and records people who have significant control over the company and contains stipulated information about them. In summary, companies need to:

  • keep an internal register of their PSCs (with their company books)
  • take reasonable steps to identify those persons who should be registered on the PSC register
  • enter the required information on the PSC register (using prescribed wording where required) - and keep this information updated
  • make the PSC register available for public inspection free of charge or provide copies on request for an optional flat fee of £12
  • file information about their PSCs at Companies House.

PSCs are under a corresponding duty to notify the company of their interest. Failure of the PSC or the company to comply with these duties is an offence. And if a relevant person fails to respond to a company’s requests for information this may eventually result in the company being able to apply restrictions (for example restrictions on transfer) on the affected shares.

All in-scope companies must keep a PSC register – even if they have no PSCs or the process of investigating who may be a PSC is still ongoing. The PSC register can never be blank – and, as noted above, there is prescribed wording to be included depending on the specific circumstances.

Who is a PSC?

Very broadly speaking, a person is a PSC if he/she:

  1. holds, directly or indirectly, more than 25% of the nominal value of the company’s issued shares;
  2. holds, directly or indirectly, more than 25% of the voting rights in the company;
  3. holds the right, directly or indirectly, to appoint or remove a majority of the board of directors of the company;
  4. has the right to exercise, or actually exercise, significant influence or control over the company; or
  5. exercises or has the right to exercise significant influence or control over a trust or firm, which itself meets any of the above conditions.

The fourth point above is potentially very wide - and there is statutory guidance available to help to clarify who this is intended to catch. This guidance also provides examples of 'excepted roles' which would not generally be caught.

The legislation also draws a distinction between those PSCs that are registrable and those that are not and should be consulted to check whose details should be included on the PSC register in any given situation – especially where the person has indirect ownership through corporate entities for example.

What do you need to do?

AIM companies should now be thinking about who may be a PSC in their company and what procedures they need to put into place in order to ensure they take 'reasonable steps' to identify them in good time. It may well be that your company has a shareholder base with no (or very few) PSCs that need to be recorded. However, if PSCs do need to be identified, whilst institutional shareholders should be aware of the change of law and be prepared to answer PSC queries directly, it may take longer to identify PSCs for large non-institutional shareholders or family trusts. 

We recommend AIM companies liaise now with their registrars and advisers to ensure that they are ready to comply with the PSC regime from 24 July 2017. The PSC rules and associated statutory and non-statutory guidance are lengthy and complex – if you need advice on your compliance with this regime, please do get in touch with us. 

Is there anything else AIM companies need to know?

Yet more changes to the PSC regime are already waiting in the wings by virtue of the Fifth EU Money Laundering Directive (5MLD).

5MLD is likely to introduce further key amendments to the PSC regime, including the reduction of the 25% threshold in the PSC regime (outlined above in ‘Who is a PSC?’) to 10% - which is likely to make compliance more burdensome for AIM companies. More on this is likely to follow over coming months.

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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.

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