Back in April 2016, registered companies in the UK have been required to create and maintain a register of people with significant control, known as a PSC register. This register includes information of people who control or exercise significant influence over the company.
As part of these measures, the company needs to submit their PSC details in their confirmation statement, which took the place of the annual return. This is now the way that details on the PSC register can be amended each year if someone leaves or someone else joins the company. It is also part of the definitive information held by Companies House.
However, just as companies were beginning to get the hang of these new measures, the whole process is changing again. As part of implementing the EU Fourth Money Laundering Directive or 4MLD, the PSC system was updated. 4MLD came into effect on 26th June 2017 with the idea of targeting money laundering and terrorist financing and is unaffected by the Brexit vote. This means if the UK is still in the EU, this rule is in force.
The main change in this latest update is that the PSC register is no longer updated annually with the confirmation statement. Instead, the information is required to be ‘adequate, accurate and current’ which means that as a change happens, it needs to be reported to Companies House. Companies are also required to maintain their Register of People with Significant Control themselves.
Other changes that came as part of the update include:
This means that companies need to report changes promptly and moves the whole process to be more in line with the existing rules around company officers such as directors or company secretaries. Their details have always been required based on events rather than an annual report.
Companies are also required to report various specified statements and confirm if they cease to be true. Most of this is around identifying and obtaining details of PSCs or if there is any reason to think no-one has significant control over the company.
There are special forms that need to be used for the processes which can be obtained through the Companies House website or paper versions requested:
LLPSC01-09 for LLPs
When a change happens, the company has 14 days to update their PSC register and a further two weeks to send the information to Companies House. This means there is a total of 28 days to notify of these changes. If this is missed, then there are penalties so it is important that companies actively update their information at all stages.
However, these changes don’t mean that the confirmation statement has gone away. This still needs to be filed from June 26th even if they related to an earlier confirmation date but cannot be used to update any PSCs. Instead, they will simply contain:
The change to the rules around PSC has seen it extended to the types of companies who need to register information. It now includes both Scottish Limited Partnerships and General Scottish Partnerships, where all partners are corporate bodies. With effect July 24th, these companies will need to update PSC information with Companies House within 14 days and then complete a confirmation statement to ensure the information is correct.
In the near future, the government has said that it might be required for all entities incorporated in the UK to take part in the PSC register scheme. This might include:
Currently, DTR5 companies are exempt but unless the company traded on Schedule 1 or EEA, this will no longer be the case and they will need to report information under the scheme. Anyone newly affected by the changes needs to proceed in the same way as companies who have amended the ‘nature of control’ conditions. This means that some may not have shareholders so the information provided should be based on other means of controlling the company.
Companies with a branch or place of business in the UK will not be affected by the changes, although they may face similar processes in their home country.
Some of the information in the PSC that is on the public record such as the person’s date of birth and usual residential address can only be accessed by specific public authorities. However, in the future, access will be given to financial intelligence units, competent authorities and others who have no obligation to carry out customer due diligence. There will also be no exceptions to allowing law enforcement to view the information.
What this all means is that companies need to look at how the changes affect them and start reporting these changes as quickly as possible to Companies House. It may prove advisable to check if anyone needs to be registered under the newly updated details that weren’t under the old rules. And companies registering for the first time may want to do it as quickly as possible to avoid having to make multiple submissions.
For companies who have already filed their confirmation statement, they need to assess if there are any changes since then that would need reporting under the new scheme and report them as quickly as possible.