The Register of People with Significant Control (the “Register”) is a new statutory register which most UK companies and limited liability partnerships (“LLPs”) will be required to keep to ensure that individuals (and certain legal entities) who are ultimate beneficial owners and controllers are identified and details of their holdings made public.

Who are subject to the new Register rules?

• UK incorporated companies (including dormant companies) limited by shares;
• UK incorporated companies limited by guarantee (including community interest companies);
  Societas Europaeae; and
• LLPs.

The new Register rules do not apply to:

• limited partnerships;
• companies that are subject to Chapter 5 of the Financial Conduct Authority’s Disclosure and Transparency Rules (DTR) which includes companies listed on the LSE, AIM and ISDX;
• 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; and 
• overseas entities (but these entities might be subject to requirements in their home countries). However, the Department for Business, Innovation & Skills is consulting in respect of an extension to overseas companies with certain economic activities in the UK.

What are the new requirements?
A company (or LLP) must do the following in order to satisfy its obligations under the new rules:
1. Take reasonable steps to find out if there are people that have significant control or influence (“PSC”) over the company (or LLP).

There are specific rules that govern what constitutes ‘reasonable steps’.

In the vast majority of cases a PSC will be an individual¹ .

A PSC is an individual who meets one or more of the following conditions in relation to a company (or LLP):

a. directly or indirectly owns more than 25% of the shares (or surplus assets on a winding up if a LLP);

b. directly or indirectly holds more than 25% of the voting rights;

c. directly or indirectly holds the right to appoint or remove the majority of directors (or those involved in management if a LLP);

d. otherwise have the right to exercise, or actually exercises, significant influence or control; or

e. holds the right to exercise, or actually exercises, 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.

The PSC may not have to be placed on the Register if the company or LLP is owned or controlled by a legal entity and not by an individual. In these cases the legal entity, known as a relevant legal entity (“RLE”), must be put on the PSC register if it is both relevant and registrable in relation to the company or LLP (both terms are detailed in the new rules).

If the company or LLP is not owned or controlled by a RLE, then the PSC must be disclosed on the Register.

2.  Contact the identified PSC or others who might know them to confirm that the PSC meets one or more of the conditions set out above and get the required information detailed in the rules.

If the company or LLP do not have the required information readily available, it needs to follow this process:

a. send a notice requesting information to the PSC or others who might know them;

b. if no response is received in one month, send a warning notice;

c. if there is no response for another month, there is an option to impose restrictions on the PSC’s share and/or voting rights after serving the relevant person(s) with another notice. When a restriction is imposed it must be stated on the Register in relation to that PSC. If the company or LLP elects to not impose restrictions, it must have valid (and documented) reasons.

3. Put the required information on the company’s (or LLPs) own Register.

Once the company (or LLP) has gathered the required information, the required information must be entered in the company’s (or LLP’s) Register. This must be done by 6 April 2016.

The company’s (or LLP’s) Register must never be empty. If the company (or LLP) is still taking reasonable steps after 6 April 2016, the company (or LLP) must state this on the Register. If the company (or LLP) does not have a PSC or RLE this must also be stated on the Register. There are specific rules regarding wording that need to be used in the Register in a variety of circumstances including these situations.

The required information in relation to a PSC are as follows:

• Name;
• date of birth (only the month and year of birth is disclosed on the central public register);
• nationality;
• country, state or part of the UK were the PSC usually lives;
• service address;
• usual residential address (which is not publically disclosed unless it is also the service address);
• date the individual became a PSC in relation to the company;
• specify which of the five conditions for being a PSC the individual meets; and 
• any restrictions on disclosing the PSC’s information that are in place.

A company (or LLP) can choose to keep the Register at Companies House, at the company’s (or LLP’s) registered office or any other place the company (or LLP) elects provided that it notifies Companies House (this is known as the Single Alternative Inspection Location (the “SAIL”)). All of the registers of the company (or LLP), for example the register of members, must be kept in one place.

If a company (or LLP) choose to keep the Register at Companies House, the Register will become part of the public record and all information available for inspection at the company’s (or LLP’s) registered office address or SAIL will be available publically.

4. File the information at Companies House which will be made available on the central public register.

From 30 June 2016, a company (or LLP) needs to file information contained on its Register to Companies House with its confirmation statement (which is essentially the new form of the annual return). Any new company (or LLP) incorporated from this date will also need to include this information in its the incorporation documentation. 

5. Keep the information up to date.

The company (or LLP) must keep its own PSC register up to date and disclose any changes to Companies House when it files its next confirmation statement.  

It is important to note that a company (or LLP) which has identified that it does not have any PSC or RLE will still need to keep a Register and state on the Register that ‘the Company knows or has reasonable cause to believe that there is no registrable person or registrable relevant legal entity in relation to the company.’

What happens if the new rules are not complied with?

If any of the above obligations are not complied with, the company or LLP as well as its officers (or designated members) who are non-compliant could be committing a criminal offence and be fined and/or imprisoned. Criminal sanctions can also extend to persons who fail to comply with a PSC information request which has been sent by the company or LLP.

¹ A PSC can be a legal entity if it is a local or national government or a corporation sole (where the function of an office sits with a person).