05 May 2016

Government issues guidance on PSC register

UK companies and Limited Liability Partnerships (LLPs) will welcome a raft of government guidance to help them comply with the new law requiring them to identify and register individuals who exercise 'significant control' over them.

Since 6 April 2016, every UK private company, most UK public companies, and all UK Limited Liability Partnerships (LLPs) must create a statutory register of Persons with Significant Control (PSCs). Failure to do so is a criminal offence. Each must take reasonable steps to find out if it has any PSCs and to identify them. It must give notice to each person (or legal entity) it knows or has reasonable cause to believe should be recorded in its PSC register. It may also give notice to others who may know someone is a PSC, or who know someone who does.

For information on how to identify a Person with Significant Control (PSC) and create a PSC register, please contact Jennifer Chambers on 0113 297 8945 or at jchambers@shulmans.co.uk. This can be a very quick and simple procedure.

The PSC register is open to the public, provided inspection is for a proper purpose. From 30 June 2016, information from a company's PSC register must be filed at Companies House on a regular basis.

The rationale behind the new rules is that if UK companies and LLPs are required to make public the names and other particulars of individuals who ultimately control or influence them, the probability that those individuals are using UK companies or LLPs for tax evasion, money-laundering, to fund terrorism, or for other wrongful activities, is reduced.

The law sets out specific criteria for determining who is a PSC, which can be complex to apply. For instance, an individual is a PSC if they do, or can, exercise 'significant influence or control' over a company, or over the policies or activities of any trust or firm whose trustees or partners would, if they were individuals, be PSCs.

The Government has now published the following guidance to help businesses comply with the new law, which they will find useful:

  • Draft statutory guidance to help companies interpret what amounts to 'significant influence or control';
  • Similar draft statutory guidance for LLPs;
  • An 87-page guide on the PSC rules generally. This is not statutory, but provides useful guidance on interpreting the conditions;
  • A five-page summary of the 87-page general guidance;
  • Guidance for potential PSCs themselves.

The above documents are all available on the GOV.UK website.