Keeping crime down with good admin!
As you may be aware, from April 2016 all non-listed
companies and LLPs need to keep a register of "people with significant
control" (PSC register), in addition to the register of directors and
register of members (shareholders), and must file PSC information with the
central public register at Companies House. The requirements in relation to
PSCs can be found in the new Part 21A of the Companies Act 2006 (as introduced
by the Small Business, Enterprise and Employment Act 2015) and were aimed at
identifying individuals (or governments) who ultimately control UK companies.
Broadly speaking, a PSC is an individual who, in relation to
a company:
- directly or indirectly owns more than 25% of its shares;
- directly or indirectly holds more than 25% of the company's voting rights;
- holds the right, directly or indirectly, to appoint or remove a majority of the board of directors of the company;
- has the right to exercise, or actually exercises, significant influence or control over the company;
- exercises or has the right to exercise significant influence or control over the activities of a trust or firm which itself meets (or would meet, were it an individual) one or more of the first four conditions.
Companies will also need to disclose in their PSC registers
details about the "registrable relevant legal entities" which own or
control them (e.g. if there was a non-UK company in a chain of other UK group
companies).
Once details of PSCs are recorded on the PSC register, an
officer of the company is required to provide this information to Companies
House as part of the Confirmation Statement (formerly known as the “Annual
Return”). Updating of the PSC register
should take place when the pertinent information changes, and then at Companies
House when the next Confirmation Statement is made. As a separate but related matter, companies
will be able to opt to keep certain statutory registers at Companies House
rather than holding their own statutory registers and this would include the
PSC register.
If a company encounters a situation where a PSC does not
respond to a request for information, the company may be able to prevent
transfers of the underlying shares and stop paying dividends on them by
following a set legislative procedure.
From June 2016, the information on the PSC register will be
searchable online at Companies House and therefore it is important that this
information is as up to date as possible.
Failure to provide accurate information on the register and failure to
comply with notices for information are criminal offences and may result in a
fine and/or a prison sentence of up to 2 years.
Accordingly, it is now even more important to ensure that
you are on top of your share scheme administration as equity arrangements that
have been entered into could impact on whether an entry on the PSC register is
required (with the requisite confirmation of such information with Companies
House).
If you need assistance with managing your share plan records and administration, please contact us.