One of the biggest changes the Small Business Enterprise and Employment Act 2015 (“SBEE”) has made involves ‘Persons of Significant Control’ (“PSC”).

Companies have a duty to take reasonable steps to gather information about any PSCs relevant to their company and must have a PSC register in place from 30 April 2016. Even if a company does not have any PSCs, it must still keep a PSC register stating that “The company knows or has reasonable cause to believe that there is no registrable person or registrable relevant legal entity in relation to the company”. From 30 June 2016, when a company next files its ‘confirmation statement’, it will need to submit details about its PSCs to Companies House.  

A PSC is a person who alone or jointly:

1.    holds, directly or indirectly, more than 25% of the shares in the company;
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; and/or
4.    has the right to exercise, or actually exercises, significant influence or control over the company.

To be a PSC, a person needs to meet one or more of the points numbered 1 – 4 above. There are also similar rules for LLPs and specific rules for trusts and firms. See our helpful guidance on the new register and how to complete it.

It is not only individuals who can be PSCs. Legal entities may also fulfil one or more of the criteria listed above and therefore qualify as a PSC, such bodies are called ‘relevant legal entities’ (“RLEs”).  All individuals and RLEs with significant control need to be recorded in the PSC register, unless they are ‘non-registrable’. BIS gives the following example about a RLE that is not registerable:

“company A is fully owned by B and B is fully owned by C. B and C are both relevant legal entities (they both keep a PSC register) who own more than 25% of the share capital of A (B directly and C indirectly). To avoid the duplication of information on the register, in this example, company A would include only the first relevant legal entity (entity B) in its PSC register, and should not include entity C. Observers who wish to delve further may look at the PSC register of entity B and through that would identify C. In this case the first entity in the chain – entity B – is a registrable relevant legal entity. The other entity – entity C – is a non-registrable relevant legal entity and should not be included in the register of company A ”.

As a result, an individual or RLE is non-registrable if they hold their interest in the company through a registrable REL, over which they are a PSC.

The information required on the register for an individual includes their name, residential and service address, country of residence, nationality, date of birth, the date when they became registrable on the PSC register and the nature of their control. For RLE’s the relevant information includes it’s corporate name, registered office, type of legal entity, law it is governed by, the date when it became registrable on the PSC register and the nature of its control. 

After the company has identified its PSC it must give them notice asking the individual/REL to confirm whether or not they are a PSC and if they are, to confirm the information held about them is correct and/or provide outstanding information. In addition, a company can give notice to a person if it believes that person is aware of the identity of a PSC, or knows someone who does. Once the register has been produced, companies are required to ensure it is kept up to date. Information about PSCs will be publically accessible (except for a PSC’s residential address and day of birth).  

If a PSC does not comply with their duty to provide the required information the relevant company can sanction them, including removing their voting rights, applying transfer restrictions and withholding sums due in respect of that interest.