Are you ready for full disclosure?
On 6 April 2016 the Small Business, Enterprise and Employment Act 2015 came into force. The act seeks to promote a deregulation of ‘Red Tape’ and in relation to UK companies a greater transparency into who actually controls them. This has prompted the introduction of the Persons with Significant Control (PSC) registration.
What is a PSC?
It doesn’t matter how big or small your company is, whether it’s engaged in business activities or whether it’s dormant, if you are a director, shareholder or trustee you may be caught if you hold, directly or indirectly:
- more than 25% of the shares in a company;
- more than 25% of the voting rights in a company; or
- the right to appoint or remove a majority of directors of a company.
In addition to this, if you have the right to exercise, or actually exercise, significant influence or control over a company you may also be caught. That means that even a third party could be caught if the terms of any private agreement confer power or control over a company.
What this means for you
If you are a company director or secretary, you are under an obligation to take reasonable steps to identify potential PSC’s. There is a prescribed form of Notice which can be served on individuals and corporate entities for that purpose.
If you are an individual or corporate entity who may now be, or in the future qualify as, a PSC you are under an obligation to notify the company of your position within two months. Therefore, if you were a registerable PSC prior to 6 April 2016, you have until 5 June 2016 to make yourself known (unless the company has contacted you beforehand).
Why should I care?
Failure to do either of the above will be a criminal offence for the director, secretary or PSC involved.
Does it end here?
In short, no. These regulations are a stepping stone towards further regulation. On 4 April 2016 the Government ended a consultation on increasing the transparency of foreign investment in UK property and we should expect further ‘PSC style’ regulations for foreign companies to follow in the next year. So if you are part of an overseas corporate structure with a UK property link, you may wish to become familiar with these requirements and how they may dovetail with your business.
If your company needs assistance with complying with these regulations, contact Andrew Kavanagh of our specialist corporate team today at firstname.lastname@example.org