Since 6 April 2016, companies and LLPs have been obliged (by the Small Business, Enterprise and Employment Act 2015 introduced part 21A and Schedules 1A and 1B to the Companies Act 2006) to create and maintain a register of individuals and legal entities with significant control over their company. As an alternative, private companies can choose to create a central register on Companies House. This alternative method means there is no need for the company to maintain its own register.
Creating the register
Previously, companies were only required to record the legal owners of their shares. However, the new regime requires companies to create a register and make initial entries of registrable persons of significant control. Then, if it has not already done so, the companies must ‘take reasonable steps to identify’ persons/entities who have significant control of the company. Registers must be made available for inspection.
‘Persons with significant control’ (PSC) and ‘relevant legal entities’ (RLEs)
Those with significant control are individuals/entities who meet one or more of the conditions set out in the new Schedule 1A. These include individuals or entities that hold an interest in the company directly (if they hold more than 25% of the shares or voting rights in the company or if they have the right to appoint or remove the majority of the board of directors). It also includes those who are indirectly have an interest – if they have ‘significant influence or control’ either over the company itself, or over the activities of a trust or a firm which meets any of the other specified conditions in relation to the company.
Notices
Once a person of significant control has been identified, companies must serve a notice on that person in order to gain the required particulars. It is a criminal offence not to comply with these notices. Entries must include complete, accurate and confirmed details. The company may also send notices to individuals seeking their knowledge about PSCs or RLEs. Some PSCs and RLEs themselves are under an obligation to inform the company of their status.
Does this affect your business?
If this is a concern please contact JPP Law and we can ensure you are meeting your legal obligations. Contact us here.
