Businesses in England and Wales could face criminal proceedings if they fail to keep and maintain a register which contains information about individuals or relevant legal entities with a significant or controlling interest in the company.
From 6 April details about those who own or control more than 25 per cent of a business’ shares or voting rights, or who have influence or control over the company or its management, will need to be recorded on a People with Significant Control (PSC) register.
The focus on PSC registers – introduced under the Small Business, Enterprise and Employment Act 2015 (SBEE) – is part of an ongoing Government drive to improve corporate transparency.
The online register, which needs to be filed at Companies House from 30 June, will typically include the individual’s name, nationality, date of birth and residential address. Details of legal entities include the firm’s name, its registered or principal office address and the date on which it first became registrable.
With the introduction of the new legislation now less than a month away, businesses are being urged to take action now in order to accurately complete the register. This includes sending out notices to anyone it knows or believes is registrable, with recipients having one month to respond. Individuals and legal entities with a registrable interest must also take proactive steps to notify and supply information to the business.
Louisa Smith, company commercial solicitor at leading commercial law firm Thrings, explains: “To meet the PSC requirements, every business in England and Wales needs to be taking reasonable steps to identify which individuals and legal entities should be included on the register, keep the register up to date and make the register available for public inspection.
“The new rules not only apply to UK incorporated businesses limited by shares or guarantee, but also to limited liability partnerships. Publicly trading companies, foreign organisations operating in the UK and those with UK PSCs are not affected.
“Businesses are not permitted to leave a register empty, even those which have no interests to be registered and those which are dormant. The penalties for non-compliance are serious, and those who fail to keep and maintain a register face a fine, and in some circumstances, a two-year prison sentence.
“Businesses should be aware that the rules surrounding PSC registers are not optional. The registers are playing a key role in a Government initiative to reduce tax evasion, money laundering and terrorist financing, and they need to take action now.”
The SBEE also removes the requirement for those companies required to maintain a PSC register to file an annual return with Companies House. Instead, each year they will need to provide Companies House with a document which confirms they have provided all required information during the 12-month period.
Further changes under the SBEE are set to be announced later this year, including a directive which prevents UK businesses from having or appointing corporate directors. This will mean that from October, businesses will only be permitted to appoint natural persons as directors.