- View from London: The PSC Register
- June 14, 2016 | Author: Fiona Adams
- Law Firm: Greenberg Traurig, LLP - London Office
As of April 6, 2016, UK companies and limited liability partnerships (LLPs) are now required to hold and maintain a register of people with significant control (the PSC Register). The PSC Register is primarily aimed at identifying and listing individuals with significant control over a UK company (whether directly or indirectly) and whether those individuals are based in the UK or overseas.
The PSC Register was implemented under the Small Business, Enterprise and Employment Act 2015 (the Act) and applies to all LLPs and UK companies except: (i) UK listed companies (as they are already subject to the Financial Conduct Authority's Disclosure and Transparency Rules), and (ii) companies traded on an EEA regulated market or on specified markets in Switzerland, the USA, Japan, and Israel.
In order to be considered a person with significant control (PSC), an individual must meet one or more of the following five conditions (the Conditions):
- The individual directly or indirectly holds more than 25 percent of the shares;
- The individual directly or indirectly holds more than 25 percent of the voting rights;
- The individual directly or indirectly holds the right to appoint or remove the majority of directors (defined as the directors holding the majority of the voting rights);
- The individual otherwise has the right to exercise, or actually exercises, significant influence or control over the company (the Fourth Condition); or
- The individual has the right to exercise, or actually exercises, significant influence or control over the activities of a trust or firm, which itself satisfies one or more of the first four conditions.
A PSC is by definition an individual and not a legal entity (such as a company). Although a company cannot be a PSC, it will be entered on a PSC register if it is a "registrable relevant legal entity." A company will be deemed a "registrable relevant legal entity" if: (i) it meets one or more of the Conditions and is itself required to keep its own PSC Register; (ii) it is subject to Chapter 5 of the Disclosure and Transparency Rules; or (iii) it has voting shares admitted to trading on a regulated market in the EEA or on specified markets in Switzerland, the USA, Japan, and Israel. The net effect of these measures is that, in a corporate group structure, each UK subsidiary that is owned by a UK company will record its immediate parent in its PSC Register, and any UK subsidiary that is not owned by a UK company will record any individuals with significant control in its PSC Register.
Under the Act, companies must take "reasonable steps" to determine whether they have a PSC. Similarly, a person who knows or ought to reasonably know that he or she is a PSC in relation to a company and is not entered as such in the company's PSC register, must inform the company of the person's status as a PSC in relation to that company. The details required to complete the PSC Register include the name, address, and country of residence, the date on which the individual became a PSC in relation to the company, and which of the Conditions the PSC satisfies. Information about a PSC must be complete and confirmed with the PSC before it is entered in the register. The PSC register makes it possible to identify not only if a company has PSCs, but also exactly who those PSCs are at any given time.
Since these measures are aimed at increasing transparency the register will be open to public inspection. Information from the register must be filed with Companies House by June 30, 2016. Overseas companies with UK subsidiaries need to be aware of the regime, as each of their UK subsidiaries will be required to keep a PSC Register.