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June 8, 2016

The UK limited companies and limited liability partnerships (LLP) will have to file an annual confirmation statement in place of an annual return beginning 30th June 2016.

This change is introduced as a part of the Small Business, Enterprise and Employment (SBEE) Act 2015. The purpose of the confirmation statement is similar to the annual return and it needs to be filed at least once every 12 months. However, it is a more simplified procedure in order to make administrative life a little easier (i.e. more manageable).

Baroness Neville Rolfe, Department for the Business Minister, said:

“Companies that disguise who owns or controls them are not playing by the rules and have something to hide. This register, the first of its kind in the world, will help tackle abuse of corporate entities. This is part of our commitment to creating an environment of trust and accountability for business.”

The Change:

All of the UK companies and LLPs effective 6th April 2006 onward, will be required to maintain a register of PSC. It should specify the details of the individuals (or organizations) who can implement significant control over the LLP or company. The PSC register needs to be maintained and updated regularly and must be made instantly available for public inspection upon request. The information will be maintained by the Companies House and should also be available for inspection where the company will be maintaining their own PSC register after 30th June 2016. New LLPs or companies incorporated after 30th June 2016 will have to submit curtailed PSC information to Companies House on inclusion.

What Is the Register Of PSC?

Register of PSCCorporations, LLPs and Societas Europaea (SEs) now have to identify and maintain a clear record of the people who own or manage their company. These individuals may be the same as the present shareholders or they can be different. LLPs, corporations and SEs will have to maintain PSC information in their own registers, apart from the existing register of shareholders or members and directors. Additionally, they are required to file the PSC information at Companies House with the central public register.

Registering PSC will eventually help with increasing transparency over who owns and manages the UK companies, and will assist in informing investors as to when they’re looking to invest in any company. It will be also supporting law enforcement agencies in inspections of money laundering.

Who is a PSC?

A PSC is an individual that meets any one of the following five conditions:

  • Owns more than 25% of the company shares;
  • Controls more than 25% of the voting rights in the company’s meetings;
  • Has power to employ or remove the majority of the company’s board of directors;
  • Exercises or has rights to exercise significant power or control over the company’ or,
  • Exercises or has rights to exercise significant control or power over a trust or firm (non-legal entity), satisfying any of the aforementioned four conditions over the company
What needs to be done by companies

What Does A Company Need To Do?

A representative of the company needs to:

  • Identify the PSC, or people with significant control over the company and authenticate their information;
  • Record the details of the PSC on the register of the company;
  • Provide that information to Companies House as an integral part of the Confirmation Statement (previously known as the Annual Return); and
  • Update the information on the company’s register regularly and additionally update the information at Companies House whenever you create your next Confirmation Statement.

Does It Mean A PSC Has To Be An Individual?

Absolutely, not. A PSC can be a legal entity or a person, as referred to in the legislation as an RLE. It’s not necessary for all RLE to be recorded on the register.

What Does The PSC Register Need To Include?

For an RLE:

  • Name of legal entity
  • Address of registered or head office
  • Legal form of entity and law through which it is governed
  • If relevant, a register in which it appears and its registration number
  • Date of becoming RLE
  • Conditions satisfied by the RLE (with evaluation of interest where applicable)

For An Individual:

  • Name
  • Date of birth
  • Nationality
  • Service address
  • Country or state of usual residence
  • Usual residential address (not necessary, if similar to service address).
  • Date of becoming a PSC
  • Conditions satisfied by the individual (with evaluation of interest where applicable)
Effecting business

How Does This Affect Businesses?

Every company and LLP (with very few exceptions, for example, companies with the Main market or AIM listing) is covered. The new requirements are applied to both public and private companies, companies limited by guarantee, companies limited by shares and emergent companies.

From 6th April 2016 onwards, companies or LLPs have started taking rational steps to identify its PSCs and get a PSC register reflecting the phase it is at in so doing.

Failing to do will be a criminal offense. Doing nothing is, hence, not an option.

Companies and LLPs have started considering whether or not they have any PSCs and further, take essential steps to get the necessary information from them.

Action to Take Now

Essentially, there are two key requirements:

  • To own and maintain a PSC register – From 6 April 2016 onwards, the compulsion has to have been a register of the company, take rational steps for identifying PSCs and record correct details on the register. The PSC register needs to be regularly updated and should be available for public inspections.
  • To make necessary filings – from 30 June 2016 onwards, when filing an annual Confirmation Statement (the replacement for the Annual Return) at Companies House. It’ll be important to include PSC information available at the time of filing. Presently, the information held centrally will be annually updated, which is expected to change in the future.

What If The Requirements Aren’t Complied With?

Failing to provide the appropriate information on the register and failing to adhere to the notices for information are both criminal offenses and may result in a penalty and/or an imprisonment of up to 2 years per offense.

By Capium
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