Update on recent and future PSC Register changes
February 21, 2018
At the core of the MLD4 and the new Regulations is the extension of existing PSC regulations to incorporate more companies.
The People with Significant Control (“PSC”) register (the “Register“) was introduced by the Small Business, Enterprise and Employment Act 2015 (“Act”) as a part of the UK’s effort to increase transparency around the ownership of companies, tackle corruption and reduce money laundering.
Since its introduction, the requirements in relation to PSCs and the Register have undergone a series of changes, the most recent being brought about by the Fourth Anti-Money Laundering Directive (EU 2015/849) (“MLD4”) which was implemented on 26 June 2017. The UK introduced The Information about People with Significant Control (Amendment) Regulations 2017 (the “Regulations”), which also came into force on the 26 June 2017, to align the UK requirements with the changes introduced by MLD4.
This article seeks to remind companies and LLPs of the recent changes introduced by MLD4 in 2017, and to make them aware of the government’s intended future plans in this area.
MLD4 Key Changes
At the core of MLD4 and the new Regulations is the extension of existing PSC regulations to incorporate more companies. Similar to the aims behind the introduction of the Market Abuse Regulation (Regulation 596/2014), MLD4 is an example of the shift in the governments approach towards issues such as corruption and money laundering in the corporate world. Both seek to tie up loose ends in current legislation and broaden the range of entities under its control. The key changes are summarised below:
Updating the Central Register at Companies House
The rules on updating the Register maintained at Companies House have been tightened. Previously companies were required to update their PSC information as soon as reasonably practical after any changes to such information occurred, which allowed companies room for leniency. This has been changed to ensure that companies update the Register within 14 days, providing more rigorous checks and specific deadlines for companies to satisfy their obligations.
Furthermore, the way a company discloses their PSC information has been altered. The information on PSC’s must be maintained in real time instead of companies updating their information annually via the confirmation statement. Crucially this obligation has been backed up by the Regulations, making it an offence for companies to not fulfil their responsibilities. This forces companies to become more proactive and aware of their duties.
Extension of PSC regulation to AIM and NEX Markets and other entities
MLD4 has caused an increase in the range of companies encompassed by the rules regulating the requirements to maintain a Register. From 24 July 2017, UK companies incorporated on AIM and NEX Exchange Growth Markets have been subject to the Act and Regulations. Another change, brought in by the Scottish Partnerships (Register of People with Significant Control) Regulations 2017 (S.I. 2017/694), means that Scottish limited partnerships fall within the scope of the Directive because they have legal personality, unlike English limited partnerships.
Significantly, the government intends to establish a public register of beneficial ownership of overseas legal entities that own or buy property in the UK, or that participate in central government contracts. A draft bill is expected to be produced in the summer of 2018, with a view to going live in 2021, which would put in place a register of non-UK companies that shows details of who owns and controls those non-UK companies that own UK properties.
Information required on the PSC Register
As a result of the introduction of the Act, certain companies and LLPs are required to publish information about a person or a registrable relevant legal entity (i.e. a company) who; directly or indirectly owns more than 25 per cent. of the shares or voting rights, can appoint or remove the majority of the directors of the company, has the right to exercise significant influence or control over the company, or where a trust or firm satisfies one of the above conditions. The information required in respect of an identified person of significant control is:
- Date of birth
- Country, state or part of the UK where the PSC usually lives
- Service address
- Usual residential address
- The date he or she became a PSC in relation to the company (for existing companies 6 April 2016 should be used, for existing companies newly in scope in 2017, 26 June 2017 should be used)
- Whether an application has been made for the individual’s information to be protected from public disclosure
Information of a similar nature is required in respect of registrable relevant legal entities.
For more information or if you require advice on ensuring you are compliant with the laws around PSCs and the Register please do get in touch.