The Small Business, Enterprise and Employment Act 2015 (the “Act”) received Royal Assent on 26 March 2015 and has been and continues to be implemented in stages. As of 6th April 2016, Companies are required to keep a register of ‘people with significant control’ over it (a PSC Register) and from 30th June 2016 Companies will be required to send the information on the PSC Register to Companies House where it will be accessible to the general public.
Who are ‘people with significant control’?
Under the Act, a person with significant control is an individual (either alone or as one of a number of joint holders of the share or right in question) that meets one or more of the following conditions:
- holds more than 25% of the shares in the company (including holding the shares indirectly for example as a beneficiary of a trust)
- controls more than 25% of the voting rights in the company (either directly or indirectly)
- has the power (directly or indirectly) to appoint or remove a majority of the board of directors of the company;
- has the right to or otherwise exercises signification influence or control over the company.
- has the right to exercise or actually exercises significant influence over a trust or firm which in turn falls within any of the above categories in relation to the company.
There are broadly equivalent provisions for the PSC register of an LLP.
Companies are obliged to take reasonable steps to find out if there is anyone who is a registrable person which includes investigating and sending notices to persons they know or have reasonable cause to believe are registerable persons requesting they confirm their details. Failure by the Company to act accordingly is an offence punishable by imprisonment (for its officers) or fine.
Individuals are placed under a proactive disclosure obligation if they receive a notice from the Company and they know or ought to reasonably to know that they are a registrable person. A Company may issue a restriction notice against an individual who fails to respond which may have the effect of freezing the individuals interest in the affected shares, preventing the individual from not only transferring the shares but from voting and receiving dividends.
What to do next
Companies must prepare a PSC Register listing people with significant control, take steps to identify people with significant control and contact them to confirm their details. Companies must then register their PSC Register at Companies House or face the risk of criminal penalties.
There are special circumstances when Companies House will allow individuals to keep their details off the public register. However these circumstances are limited to when publishing an individual’s details would put that individual in danger of harm or intimidation (for example, directors of pharmaceutical companies may receive threats of violence from animal rights activists and so are often successful in applying to keep their details from the public register ).
If you are a shareholder or company director and wish to discuss this further please contact Alex O’Leary on 020 8891 6141 or e-mail him at firstname.lastname@example.org