The UK will implement new legislation in the UK that requires all incorporated companies to maintain a register of people that exercise significant control over the company or that beneficially own shares. This is motivated by wanting to further increase the transparency of ownership and control of companies incorporated in the UK. This register will further erode the concept of confidentiality and the right to privacy of people who have companies in the UK.
Who will have to be registered?
The new law defines people that need to be registered as ‘Persons with Significant Control’ (PSC). A PSC is defined in the new law as:
– an individual who, directly or indirectly, holds more than 25% of the shares or voting rights in the company; or
– a person who can appoint or remove a majority of the board of directors of the company; or
– a person who exercises or has the right to exercise ‘significant influence or control’ over the company; or
– trustees of a trust who meet the conditions above in their capacity as trustees; and/or
– a person who exercises or has the right to exercise the right to exercise ‘significant influence or control’ over the activities of that trust:
The law itself does not further clarify what exactly is meant with ‘significant influence or control’ but it is expected that the government agencies will issue further guidelines that will give some clarification on this concept.
The way a PSC is defined has been designed to look beyond the registered owner of a company. It focuses on who is behind the company, comparable to how the Ultimate Beneficial Owner (UBO) of a company is defined.
Which information will have to be registered in the PSC Register?
The information that has to be registered can be divided into information that will be public and information that has to be registered but that isn’t public. The information of the PSC that needs to be registered in the public register is:
– the name of the person
– the country where he/she usually resides
– their nationality
– the date on which the person became a PSC
– the nature and the extent of the beneficial interest held by the PSC
Information that also has to be provided but will not be held in the public register is:
– the residential address of the PSC
– the date of birth of the PSC
Obligation of companies to comply
Companies incorporated in the UK will have to take all measures in order to identify the PSC of their company and to keep this information up to date. When the company does not have this information it will have to send a notice to the person(s) that they believe to know the identify of the PSC and these persons will have to comply within a month of receiving this notice. Even if someone hasn’t received such a notice, when they know or ought to know who the PSC of the company is, they will have to notify the UK company. This duty will also exist for the PSC.
The new law is very strict with the duty to comply with these provisions and failure to comply will constitute a criminal offence for all involved. This can be the company, the persons who know or ought to know who the PSC of a company is and the PSC.
The implementation of the new legislation
Companies are required to have the information on the PSC in a PSC register which they have to make available for public inspection from April 2016. Companies have the choice from June 2016 whether they want to hold their PSC register at their registered office or to keep it at a Central Register at UK Companies House. The Central Register will be available online and will be publicly accessible and searchable for everyone. Companies that opted to have their PSC information to be held at the Companies House will have to send their information to the Company house starting from June 2016 and subsequently they will need to confirm this information annually.
Is it clear that this new legislation poses a significant threat for anyone that values confidentiality and privacy. For these people it is recommended to either rearrange their company structure in order to disengage from their position of significant control or influence, or to split their shares in order to lessen their percentage of shares in a UK company. Another option would be to move their company to a jurisdiction that does value the privacy and confidentially of people. Freemont Group can advise and help you with these options. Feel free to contact us.