New requirement for all companies from 6th April

Published: Mon, 04/04/16

From 6 April 2016 nearly all companies based in the UK will have to maintain a new Register to record of People with Significant Control (PSCs) which will be called the PSC Register. It seeks to address the question: “Who really controls this company?"

The legislation requires companies to take “reasonable steps” to ascertain whether there are any PSCs and, if there are, to identify them.

What constitutes “reasonable steps” will differ from company to company but, especially because the penalties for non-compliance may be severe, company directors and their accountants may well err on the side of caution.

A PSC is anyone who meets one or more of the following conditions:

They hold more than 25% of the company’s shares
They hold more than 25% of the company’s voting rights
They have the power to appoint or remove a majority of the company’s board
They have the right to exercise or actually exercise significant influence or control over the company
They have the right to exercise or actually exercise significant influence or control over a trust or a firm that is not a legal entity which itself satisfies any of the first four conditions.

In many cases the identity of the PSCs will be obvious. For example, in a company with just two shareholders who each own 50% of the shares and where the company has adopted the model articles, it will most typically be these two shareholders and no one else who will be PSCs.

Other situations will be more complicated, and more investigation will be required. This guide from Inform Direct will prove useful in determining who your PSCs are if it isn’t obvious.

As well as the PSC register maintained by the company, Companies House will maintain a global register of PSCs that can be publically inspected. Therefore, the company periodically needs to update Companies House with details of its PSCs.

The first time most companies will report their PSCs is in their first Confirmation Statement, (which replaces the annual return from 30 June 2016) The details of each PSC must be submitted, alongside a history of statements about PSCs (the same ones that have to be included in the register itself) that were true during the year.

Thereafter, any changes to PSCs – new PSCs, changes to existing PSCs, people ceasing to be PSCs and any statements that become true or cease to be true – must be reported at the next Confirmation Statement.

The guide from Inform Direct is a helpful summary of all these changes.

Noel Guilford

Noel Guilford is the principal of Guilford Accounting a small business accountancy practice specialising in advising owner-managed businesses on current accounting, finance, and tax matters. You can reach him via email at noel@guilfordaccounting.co.uk or by phone at 01244 660866. He is the author of the best selling book 'Figure it out - an entrepreneurs guide to understanding your business numbers' which you can obtain by visiting http://guilfordaccounting.co.uk/figureit out.