Graeme Sloan, Vladimir Maly, Gary Brown and Andrew Boyd
Important reforms designed to increase the transparency of the ownership and control of UK companies and English law LLPs were introduced in the UK on 6 April 2016. Among the most significant of these was a requirement for UK companies and English law limited liability partnerships (LLPs) to maintain a compulsory statutory register (the “PSC register”) of certain persons with significant control (PSCs), who are usually individuals, and registrable relevant legal entities (RLEs). This is referred to as the PSC Regime.
When the PSC Regime was introduced, the requirement to maintain a PSC register applied to English law LLPs and most UK incorporated companies. However, certain UK incorporated companies fell outside the PSC Regime and did not need to maintain a PSC register, these were:
- companies already subject to the disclosure requirements of chapter 5 of the Disclosure Guidance and Transparency Rules (DTRs) as set out in the Financial Conduct Authority (FCA) Handbook (broadly including companies listed on an EEA-regulated market such as the London Stock Exchange’s main market for which the UKis their home state or UK public companies with shares admitted to trading on prescribed markets including AIM and the NEX Exchange Growth Market);
- companies with voting shares admitted to trading on a regulated market in an EEA state other than the UK; and
- companies with voting shares admitted to certain other specified markets in the United States, Japan, Israel and Switzerland.
The Information about People with Significant Control (Amendment) Regulations 2017 (the “PSC Amendment Regulations”) came into force on 26 June 2017 and form part of the UK’s implementation of Directive 2015/849/EU (the “Fourth Money Laundering Directive”) which EU member states were required to implement on that date.
The main changes introduced by the PSC Amendment Regulations are to:
- bring additional companies within the ambit of the PSC Regime;
- introduce new deadlines for filing relevant information with Companies House; and
- alter the manner in which information is notified to Companies House.
Additional entities fall within the PSC Regime
As a result of the PSC Amendment Regulations entering into force, additional entities now fall within the PSC Regime which has been extended to include:
- UK-incorporated companies trading on AIM (and other companies with shares that are admitted to trading on a “prescribed market” such as the NEX Exchange Growth Market) because the statutory definition of companies that are exempt from the PSC Regime has been narrowed;
- certain types of Scottish limited partnerships and certain other Scottish partnerships. Scottish partnerships that are affected do not have to maintain their own separate PSC register, but must obtain and submit their relevant PSC information to Companies House and are subject to a requirement to update any changes; and
- some unregistered companies.
These changes mean that the only UK-incorporated companies that are exempt from the PSC Regime are:
- those with voting shares admitted to trading on a regulated market situated in an EEA state such as the London Stock Exchange’s Main Market; and
- companies with voting shares admitted to trading on certain specified markets in the United States, Japan, Israel and Switzerland.
Actions to be taken by UK-incorporated AIM-listed companies
Unless a UK-incorporated AIM-listed company falls within one of the exemptions listed above, it is now subject to the PSC Regime and must:
- from 26 June 2017 investigate its ownership and control;
- from 24 July 2017 maintain a PSC register; and
- on an ongoing basis, monitor its PSC and RLE details, update its PSC register and comply with its filing obligations at Companies House.
Failure to comply with the PSC Regime is a criminal offence and the company and its directors and officers may be subject to an unlimited fine or imprisonment for up to two years or both.
Therefore UK-incorporated AIM companies should investigate and collect information on their PSCs and RLEs. Where appropriate, they should issue notices to any registrable PSCs (or persons whom they have reasonable cause to believe may be registrable) to help identify them correctly and to obtain the information necessary to complete the PSC register. Notices should also be issued to obtain the prescribed information required in respect of any registrable RLEs to enable the AIM company to complete its PSC register. The PSC register should also be drawn up, and companies should ensure that it is ready by 24 July 2017 and any other filings required by Companies House should also be prepared.
New filing requirements
Subject to a short transitional period for UK-incorporated AIM-listed companies, from 26 June 2017 all companies subject to the PSC Regime must:
- update their PSC register within 14 days from when the company became aware of a change to their PSC or RLE details (which particulars need to be sought and, where relevant, confirmed promptly); and
- file the updated information with Companies House using the appropriate form within the subsequent 14 days.
Manner in which information is notified and other changes
- PSC register information no longer needs to be delivered to Companies House at the same time as the annual Confirmation Statement. However, companies and LLPs do need to confirm (in their annual Confirmation Statement) that they have complied with the new requirements of the PSC Regime. This applies to companies and LLPs that deliver Confirmation Statements on or after 26 June 2017.
- There are also changes to the protection regime (where application can be made to have PSC information withheld from the public register where disclosure would put a person at risk of violence or intimidation) so that credit and financial institutions will be able to access “secured” PSC information where appropriate.
- Companies House has introduced a number of new and amended forms for the purposes of registering and updating information required by the PSC Regime.