Look out company owners and directors – you will soon be on the register. The Small Business Enterprise and Employment Act 2015, introduced in March 2015, states that UK companies have to maintain a register of all parties who have a ‘significant influence or control’ over their company.
From January 2016, the PSC register (Person with Significant Control register) will be introduced and will require companies to maintain a list of people who have a major influence on their business, in the hope of improving transparency. The government aims for the register to be made public and searchable on Companies House from April 2016; the public will then have access to the following information – name, trade address, nationality and date of birth of the people who control a company. Failure to comply with the disclosure obligations may result in criminal sanctions and/or penalties.
So, what companies need to maintain a PSC register? The UK Government are not playing about with this and have made it mandatory for all businesses, even dormant and subsidiary companies. Limited Liability Partnerships can also expect, under secondary legislation, to be liable. The only group of companies exempt are those who are publicly traded.
Will you be on the register? Those who meet the following criteria must be listed on the register:
- Has the right to exert ‘influence or control over a company’
- Is entitled to 25% of Company shares (directly or indirectly)
- Is entitled to 25% voting rights of the company
- Has the authority to appoint, demote or remove a majority of the board of directors
Through reviewing this new Act, my main concern is for companies who have a complex work structure, as I can already think of many of my clients who are going to find it challenging to determine who falls into the above categories and has ‘significant control’. It seems to be yet another administrative burden placed upon businesses and I struggle to see the value it is going to bring. In the autumn, technical guidance will be released to help define the meaning of ‘significant influence or control’, so we wait in anticipation for that. I advise that all companies, particularly those with complex structures, to begin considering the above as soon as the guidance is released this autumn. In the meantime, if you would like to discuss this area further, please feel free to contact me at firstname.lastname@example.org.
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