It has been nearly two years since The Small Business, Enterprise and Employment Act 2015 required all private UK companies, whether they are limited by shares or by guarantee, to maintain a register of those people who have significant control over the company.

It is important that charitable companies understand their obligations to keep and maintain a PSC (People with Significant Control) Register.

Who counts as a PSC?

A PSC is a person or an organisation (although organisations are referred to as relevant legal entities or RLE rather than persons with significant control) who either:

1. directly or indirectly hold more than 25% of the voting rights in the company

  • in the standard charitable company limited by guarantee model (one vote per member) this is relevant where there are less than four members

2. directly or indirectly own more than 25% of the shares in the company

  • where a charity wholly owns a trading subsidiary, the charity will be a RLE of the trading subsidiary

3. directly or indirectly has the right to appoint or remove a majority of the directors of the company

  • note that this does not mean that the trustees of a charitable company, where they are also the only members, are caught by this, as they would wield the power to appoint/remove trustees collectively not individually.

4. has the right to exercise, or actually exercises, significant influence or control over the company

  • ‘control’ will be indicated by having a right to direct the organisation’s activities
  • 'significant influence’ will be indicated by a person being able to ensure that the organisation generally adopts activities which that person desires
  • in neither case does the control or influence have to be exercised by a person with a view to gaining economic benefits from those policies or activities
  • note that a director/trustee acting in their usual capacity as a director/trustee is not a PSC simply by virtue of this

5. has the right to exercise, or actually exercises, significant control over an organisation which is not a legal entity (e.g. a trust) which meets any of the above criteria in relation to the company

  • if a trust has significant control of a charitable company, the person(s) with significant control of that trust will be required to go on the PSC register in relation to the company.

What should be included in the PSC register?

If a company has no PSCs or RLEs it must still have a PSC register. The necessary statement should be included confirming that there are no persons with significant control.

If the company has a PSC, the PSC register must include the following information in relation to that person:

  • name
  • service address
  • the country or state (or part of the United Kingdom) in which the individual is usually resident
  • nationality
  • date of birth
  • usual residential address
  • the date on which the individual became a registrable person in relation to the company in question and
  • the nature of his or her control over that company

There are a number of protections (based upon the existing regime for protecting directors’ residential addresses) to ensure that the usual residential address is not accessible to the wider public.

Where a company has a RLE, similar information must be kept, although there are slight differences – e.g. the company registry and registration should be noted, as opposed to the nationality.

Compliance

All companies must take reasonable steps to identify people they know or suspect to have significant control, including by giving notice to persons with significant control and others to obtain information.

Companies are required to update the information if they know, or might reasonably be expected to have known, that a change to a PSC has arisen. Persons with significant control must inform the company of any changes to the information recorded.

Companies need to provide a statement of initial significant control setting out their PSCs to Companies House on incorporation and have to update that information at least once every year by submitting a confirmation statement.

Anyone, including an unrelated individual or organisation, with a proper purpose can have access to the register free of charge. It is therefore very important that the register is kept up to date.

Instead of keeping and maintaining the PSC register at the registered office of the company it is possible to keep the register at Companies House. This is done by the company submitting the appropriate forms to Companies House. However that will mean that additional information is available for public view.

Failure to adhere to this legislation is a criminal offence and may result in a fine and/or prison sentence of up to two years.