PSC REGISTER: HAVE YOU GOT IT RIGHT?
In April 2016, new rules came into force requiring every UK company and LLP to produce, keep and maintain a dedicated register of people with significant control (“PSC”) over that company or LLP. The rules were complicated and the definition of who would and would not constitute a PSC was not always clear. Almost 2 years later, many companies are still filing incorrect information or insist that the company has no registrable PSCs, when in fact this is not the case.
Rebecca Gardner, Corporate and Commercial Partner at Howat Avraam Solicitors, identifies some of the main areas of confusion in relation to PSC Registers:
Directors are not (simply by virtue of being a director) a PSC of a company. The PSC rules seek to identify the individuals that ultimately control and own the company. Unless a director has special rights meaning that he cannot be removed from office by the shareholders of the company or he is a shareholder in his own right, he will not be a PSC.
Dormant and non-trading companies are also required to maintain PSC Registers.
Where a company is a wholly owned subsidiary of another company, that doesn’t mean that it isn’t required to maintain a PSC Register. If the parent company is another UK company that maintains a PSC Register, then it will be sufficient for the subsidiary to include details of the immediate holding company in its PSC Register. However, if the immediate parent company doesn’t maintain a UK PSC Register (for example, an overseas company), then it will be necessary to enquire further up the chain of ownership to identify any individuals that ultimately have control over the company.
Similar rules apply where any shares are held by trusts or nominees. The PSC rules require companies to look behind the trust to identify any individuals that have significant control. This will usually mean reviewing the trust deed to identify the intended beneficiaries.
Limited Liability Partnerships are also required to maintain PSC Register. As LLPs don’t have share capital, it’s often less straightforward to identify who the PSCs are. However, the members of the LLP should consider the terms of any members’ agreement or other arrangements between them to ascertain whether any one person or entity controls 25% or more of the voting or other rights relating to the LLP.
If you’re unsure about what to include in your PSC Register or are concerned that you may not have complied properly with the requirements, please do not hesitate to get in touch.
Howat Avraam Solicitors provide Corporate, Commercial, Employment, Intellectual Property and Contract Dispute advice to companies, business owners and individuals. As business owners ourselves, we have a pragmatic in-house approach to resolving issues before they arise by working alongside our clients, as part of their team. We are commercial, practical and entrepreneurial in our approach to legal services.
To discuss any Corporate or Commercial matter with us on a no obligation basis, please contact Rebecca Gardner on 020 3735 6700 or email Rebecca at Rebecca.Gardner@hasolicitors.co.uk. Alternatively, visit our website at www.howatavraamsolicitors.co.uk for more information.