The requirement for a register of ‘persons with significant control’ came into force on 6 April 2016. Alison Matthews explains what you need to know
The requirement for companies and LLPs to keep a register of ‘persons with significant control’ (PSC) came into force on 6 April 2016 and applies to legal practices.
Firms must ensure that they are compliant with this legislation. Failure to comply with the requirements can result in criminal offences.
It is a mechanism to ensure the beneficial ownership of a company or LLP is transparent. It implements elements of the fourth Anti-Money Laundering Directive, which came into force on 26 June 2015.
The requirements are set out in:
The statutory and non-statutory-guidance, together with the legislation, are available on the legislation website.
If your legal practice is a company or LLP, you must have a PSC register which identifies the persons (either natural persons or legal entities) who have control over the company or the LLP. Failure to have a PSC register (even if it is empty) is a criminal offence.
An individual is a PSC if they meet one or more of the following five condition:
Identifying persons with significant control may appear easy, but the conditions provide some challenges. For example, in one business, the chief executive officer may hold the right to appoint or remove the majority of the board (or equivalent); in another, the board may be elected. You will need to consider and assess how your practice is managed and to determine who is a PSC. Annex 4 of the non-statutory guidance provides helpful information for LLPs.
If the structure includes holding companies or separate LLPs, you will need to identify both the PSCs and any ‘relevant legal entity’ (RLE) ie one which has significant control of the company and which meets similar conditions to the PSC conditions.
If you cannot establish who your PSCs/RLEs are, you can put in place a ‘holding’ PSC register which states: ‘The company/LLP* has not yet completed taking reasonable steps to find out if there is anyone who is a registrable person or a registrable relevant legal entity in relation to the company/LLP*.’
You may need to contact those who you believe are PSCs to confirm the position, but the non-statutory guidance also provides further assistance.
There is not sufficient space here to consider the detailed conditions that must be met by a PSC or RLE, what is significant influence or control, or the information that must be provided on the register – , the statutory and the non-statutory guidance should help here.
The register is held by the company or LLP, and the wording entered on the register must be in the prescribed format (as set out in the legislation).
After 6 April 2016, every UK company (unless exempt) or LLP must have a PSC register, which must never be empty.
From 30 June 2016, eligible companies or LLPs must deliver the information annually to the central public register at Companies House, by submitting a ‘confirmation statement’.
If you incorporate a new company or LLP after 30 June 2016, you will have to send a ‘statement of initial significant control’ and the usual incorporation documents to Companies House. The information will be need to be kept up to date at Companies House, once the fourth Anti-Money Laundering Directive is implemented.
The company / LLP and its officers will commit a criminal offence if they fail to keep a PSC register. If they fail to keep the information up to date, that is also a criminal offence.
There are also criminal offences with similar sanctions if you provide false information or fail to:
It will not be enough just to comply with the new regime. Further change is on the horizon. The fourth Directive will be implemented, there are likely to be changes to supervision following the recent call for information on the anti-money laundering supervisory regime, and further consultations are expected later this year to extend the provisions to Scottish Limited Partnerships and some other legal entities.