Part 7 of the Small Business, Enterprise and Employment Act 2015 (SBEEA) requires UK companies to keep this register from April 2016. This is part of the transparency requirements of the SBEEA which also include the abolition of bearer shares and the almost total abolition of corporate directors /. Companies House has issued guidance on this area.
The legislative process is that sec81 of the SBEEA provides that the Companies Act 2006 is amended as set out in Schedule 3 of the SBEEA. The effect is to insert a new Part 21A into CA 2006 requiring persons with “significant control” over a company to notify the company, the company to seek such information, and for it to be included in a new statutory PSC register kept either by the company itself or by Companies House.
The basic layout of the new Part 21A is:
Sec790B: The rules apply to all companies other than “DTR5 issuers” and any other companies excluded by regulations because they are subject to disclosure rules similar to those applying to DTR5 issuers.
A “DTR5 issuer” is an issuer of securities to which Chapter 5 of the Disclosure Rules and Transparency Rules made by the Financial Conduct Authority applies (essentially listed companies).
Note that the PSC register rules apply to companies limited by guarantee, LLPs and (subject to special rules) limited partnerships as well as to companies limited by shares.
By sec 790C The rules for determining “significant control” are set out in Schedule 1A.
A person will have significant control if they:
The Secretary of State has to issue guidance on this and a working group has been established to devise these guidelines. Draft guidance has been published. Regulations may be may be made by statutory instrument (Sched sec26(1)).
In each of the cases mentioned above the rights include where the person is a joint owner of the shares or the rights, or holds the shares or the rights through a company which he controls, or through a chain of companies where each controls the next one down the chain, or has an arrangement with others so that they together hold (in any of these ways) more than 25% of the shares. Note, however, that someone who holds such shares or rights just as a nominee for another is not a person having significant control, but the person for whom they hold the shares or rights is. There are complex definitions of all these matters.
A person who has any such rights is a registrable person unless they are subject to other rules as to their disclosure (e.g. where the shares are listed and so subject to the listing rules).
By sec790D a company must take reasonable steps to identify all its registrable persons. Unless it already has all the required information, it must give notice to anyone whom it knows, or has reasonable cause to believe, to be a registrable person requiring them to state whether or not they are a registrable person in relation to the company and, if so, to confirm or correct any particulars included in the notice, and supply any that are missing.
A company may also give notice to a person (e.g. a shareholder) if it knows or has reasonable cause to believe that the person knows the identity of someone who is registrable or knows the identity of someone likely to have that knowledge requiring them to provide the relevant information within one month.
By sec790G the recipient of a notice is bound to disclose to the company the details that should be on the PSC register, if they know or reasonably ought to know that they are registrable, and to notify the company of any changes that occur to the details. The company must keep the registered information up to date and may use the above powers to do so.
The Secretary of State may make regulations granting exemptions form these requirements.
The recipient of a notice is not required to disclose any information which is subject to legal professional privilege (in Scotland, to confidentiality of communications) in reference to legal proceedings.
If the company doesn’t get the information it has requested, it may issue a warning notice, followed a month later by a restrictions notice, the effect of which is:
The company may also apply to the court for an order that the shares be sold.
The court has powers to order the restrictions be lifted or varied on the application of any person who is aggrieved, including where the application is to protect third party rights. The details of this are in Schedule 1B.
By sec790K details of a registrable person that must be disclosed and registered are:
If a legal entity (such as a company) is to be registered, the details are—
Sec790M imposes on a company a duty to keep a register of people with significant control over it containing the required particulars once they have been confirmed.
If the company becomes aware of any changes, these must be registered once they have been confirmed. The information must be kept on the register for 10 years after the person ceased to be a registrable person in relation to the company (sec790U).
By sec 790N a PSC register must be kept available for inspection at the company's registered office or some other place notified to Companies House. It must be open to the inspection of any person without charge and any person may require a copy of it, or part of it, on payment of the prescribed fee, subject to rules equivalent to those applicable to other statutory registers. Note, however, that the person’s residential address must not be disclosed on inspection.
The court has a power to rectify the PSC register under sec790V.
Instead of keeping the PSC register itself, the company (or its subscribers on incorporation) may elect to have the PSC register kept at Companies House and to be made available to inspection there (like other records). This can only be done if the persons on the register consent (or do not object within 14 days of the company sending to them a notice that it intends to make this election). This part of the new regime to allow companies to keep other aspects of its statutory registers at Companies House rather than in a register kept by the company itself under sec94 of the SBEEA 2015. For many small private companies this will be a very simple way of complying with these new statutory requirements and comes into force in April 2016.
By sec790ZF the provisions of sections 240 to 244 (directors’ residential addresses: protection from disclosure) apply.
By sec82 SBEEA the Secretary of State must review the new laws on PSC registers and report to Parliament within three years from their introduction.