New rules on who is in control
Since April 2016, as part of the Government’s commitment to greater corporate transparency, private UK companies and limited liability partnerships (LLPs) have had to create and maintain a register of people with significant control (PSC). People included on this PSC register are subject to certain disclosure requirements.
The introduction of the PSC Register will help combat tax evasion, money laundering and terrorist financing by allowing a full picture of both the legal and beneficial ownership of businesses to be created. All UK companies must comply to the rules, with a few exceptions.
Who is a PSC?
A PSC can be either an individual or a UK-registered company which meets one of five conditions as set out by legislation. The first four of which are:
1. Persons who hold more than 25% of the company’s shares; or
2. Persons who hold more than 25% of the company’s voting rights; or
3. Persons with the right to appoint or remove a majority of the directors; or
4. Persons with the right to exercise, or who actually exercise, significant control over the company.
The fifth condition covers trusts or firms where there is a chain of ownership that satisfies one of the first four conditions.
Where a UK-registered company meets one of the conditions for a PSC it will be a relevant legal entity.
However, a non-UK registered company cannot be included on a company’s PSC register as a relevant legal entity. Until June 2016, only details of immediate shareholdings were filed as part of the company’s annual return. This provided limited information on the controlling interests of the company as in many cases the immediate legal owners of a company may differ vastly from its significant controllers. The annual return has now been replaced with a confirmation statement, to be filed annually with Companies House. The statement includes a requirement to file details of the PSC register and as such, details of significant controllers of UK companies will now be publicly available.
Following the uncertainty of Brexit, the issue of corporate transparency has found a new importance. Any firms yet to register are encouraged to contact their business advisory service.
*For further information Kate McCann can be contacted at firstname.lastname@example.org or visit http://www.grantthorntonni.com/
Grant Thornton (NI) LLP specialises in audit, tax and advisory services