Persons with Significant Control, What are the recent changes?

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Incorporated companies in England and Wales are governed by the Companies Act 2006, which has recently been amended by the Small Business, Enterprise and Employment Act 2015. This piece of legislation made changes to the governance of a company, which included amending the registration and filing process for persons with significant control of a company. This change officially took effect in April 2016. 

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Persons with Significant Control?

A person with significant control is defined as a shareholder who has ‘control’ of the company to an extent. They may be able to dominate in the voting process, or be able to influence others to vote or act a certain way within the company. Therefore, any shareholder who:

  • Owns more than 25% of the company’s shares OR voting rights;
  • Holds the right to remove or appoint the majority of board directors;
  • Has the right to or actually exercises significant influence or control; or
  • Holds the right to exercise or actually exercises significant control over a trust or company that meets one of the above criteria, is considered to be a person with significant control (“PSC”).

What changes were made?

The amendment saw the insertion of Part 21A into the Companies Act 2006, titled “information about people with significant control”. This part details what is to be included in the register, when it is to be filed, how it is to be updated, and other administrative procedures. 

Additionally, section 12A: “statement of initial significant control” was inserted into the 2006 Act, which requires all companies, limited liability partnerships, and small enterprises, to file a statement, detailing any persons who are deemed to have significant control at incorporation, with Companies House. This statement is to be sent, alongside a confirmation statement and other required incorporation documents. Companies House is the registrar of companies in England and Wales. 

What does this mean for Companies?

When a company is first created, it goes through a process of incorporation, which allows it to be legally recognised by the government as a separate legal entity. The amendment means that Companies who are incorporated after April 2016 are now required to file their Register of Persons with Significant Control with Companies House at the incorporation stage (creation of the company) so that it is on public record who has control of that company at the beginning of its life.

It is a criminal offence to fail to disclose this register to Companies House at the correct time. 

What is disclosed on the register of PSCs?

The register of persons with significant control should detail the persons’:

  • Full name
  • Service address
  • The country or state in which the person is usually resident
  • Nationality
  • Usual residential address
  • Date of birth
  • The date on which the person became a ‘registrable person’
  • The nature of their control over that company
  • In relation to that company, restrictions on using or disclosing any of the persons’ PSC details

Registrable Persons

A person is “non-registrable” if they do not hold any interest in the company except through one or more other legal entities over which they have significant control; otherwise, they are registrable in relation to that company.

What about Data Privacy Laws?

Shareholders who are considered persons with significant control, will be required to detail information about themselves on the register, which may give rise to questions about personal data protection. 

However, the PSC’s residential address will not be available on the public register, and their date of birth is also suppressed. This makes it difficult to locate the individual, which protects them from immediate harm or intimidation. The date of birth of directors on their register is also suppressed for the same protective reasons. All other information provided is available on the public register, as it is essential that people are able to find out which persons have control of a company. 

There is an exception to this disclosure requirement. Where a PSC is at risk of harm, they can apply to have their details protected, so that they aren’t available to credit reference agencies. This does not stop the information being made available to the police if necessary. 

Formalities

Form PSC01 is the form that should be completed and filed with Companies House, to meet this procedural requirement. A template can be found on the Companies House (government) website.

Please note: For the purposes of this blog, any references to “Companies” shall be taken to also include limited liability partnerships and small enterprises. Our general disclaimer applies. 

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