Persons’ with Significant Control, the UK – Ong’anya Ombo Advocates
In April 2017, the United Kingdom issued PSC reporting guidelines in order to unearth individuals who owned significant shareholding in Companies in the UK and hid their identity behind nominee shareholders.
A nominee shareholder is an individual, company or LLP that publicly holds shares in a company on behalf of the actual owner who remains anonymous through Declarations of Trust or other Confidential Nominee agreements.
The PSC rules now require that information on the actual owners, with significant ownership in companies held by nominees, be filed on the public register at Companies House with the new annual confirmation statement.
The Legal Framework
Under Part 21A of the Companies Act 2006 (as inserted by the Small Business Enterprise and Employment Act 2015), companies limited by shares, companies limited by guarantee (including community interest companies) and Societas Europaea (SEs) are required to keep PSC register. The Limited Liability Partnerships (Register of People with Significant Control) Regulations 2016 requires the same for LLPs.
The rules, however, exempt the following types of companies as they are subject to other transparency rules:
- Companies that are listed on regulated markets in the UK; and
- Companies with voting shares admitted to trading on a regulated market in the UK or European Economic Area (other than the UK) or on specified markets in Switzerland, the USA, Japan, and Israel.
What is significant control?
In defining a person with significant control, the PSC rules state that it is an individual;
- Directly or indirectly owning more than 25% of the shares (sections 7.1 and 7.4),
- Directly or indirectly holding more than 25% of the voting rights (sections 7.2 and 7.4),
- Directly or indirectly holding the right to appoint or remove the majority of directors (sections 7.3 and 7.4),
- Otherwise having the right to exercise, or actually exercising, significant influence or control (section 7.5),
- Holding the right to exercise, or actually exercising, significant influence or control over the activities of a trust or firm which is not a legal entity, but would itself satisfy any of the first four conditions if it were an individual (section 7.6).
Legal Entities in the PSC register
Although PSC rules apply only to individuals, legal entities are entered in the PSC registers when they are relevant and registerable.
A legal entity is relevant in relation to your company if it meets any one or more of the conditions (i) to (v) set out and as significant control as outlined above:
- it holds its own PSC register; or
- is subject to Chapter 5 of the Financial Conduct Authority’s Disclosure and Transparency Rules (DTRs); or
- it has voting shares admitted to trading on a regulated market in the UK or European Economic Area (other than the UK) or on specified markets in Switzerland, the USA, Japan and Israel.
A relevant legal entity (RLE) is registrable in relation to your company if it is the first relevant legal entity in your company’s ownership chain
Company Duties in relation to PSC rules
The company is required to: investigate and obtain information on PSCs; keep the information up-to-date; Keep the register available for inspection; respond to request for inspection or copy and to notify the registrar of changes to the register.
Particulars to be entered in the PSC register
If you are a person with, or deemed to have, significant control over a company, you will have your name, service address, country or state of usual residence, nationality, date of birth and your usual residential address recorded in the company’s PSC Register.
Companies or LLPs with significant control will have their corporate or firm name, registered principal office, legal form, governing law and registration number shown. The PSC Register will also note the date upon which the person became registrable and indicate which of the significant control conditions the individual satisfies.
Significant Influence Relationship
The Department for Business Innovation and Skills (BIS) has published a non-statutory guidance, which gives examples of the types of relationships, and roles that a person can have with a company, and that may imply that such a person is deemed to have significant influence or control over that company.