Companies countdown to new transparency regulations

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Companies are on a countdown to comply with new regulations around transparency of ownership. As part of the Small Business, Enterprise and Employment Act 2015, unlisted UK companies and LLPs will have to identify people with significant control over them, and to record their details in a new statutory register.

The information must be prepared by 6 April 2016 and then filed with Companies House from June 2016, as part of the new confirmation process that replaces the annual return. The aim of the 'people with significant control' (PSC) regime to make it easier to find out who is controlling a company. The scheme is part of the a global initiative to tackle misuse of company structures and will also tie in with the EU's Fourth Money Laundering Directive requirements.

The PSC register will contain information on individuals who own or control more than 25% of a company's shares or voting rights, or who otherwise exercise control over the company and its management. In certain circumstances, it can apply where a trust or firm would satisfy the criteria if it were an individual.

Although compliance will be fairly straightforward for companies who have simple ownership and control structures, it is more challenging for those with complex ownership structures, especially if trusts, partnerships or overseas companies are involved.

However, please note that the guidelines and regulations are still only in draft form and further detail on implementation is anticipated, but the deadline dates are in place and companies need to be focused on working towards 6 April 2016.

The requirement of the Register of People with Significant Control Regulations 2016 to maintain a PSC register will apply to all UK private and public companies, other than those publicly traded companies which already report under DTR 5. The Register must be maintained at the company's registered office and will be available for public inspection and searchable online via Companies House, although certain personal information that must be provided to Companies House will be suppressed in the public version of the register.

Failure to comply with be a criminal act. It is not enough for companies to say they're not sure who has controlling interest, or to have a blank register, as they must take 'reasonable steps' to identify and list them. If a company is unable to identify who has control of, say, a holding company, this must be stated in the register.