Increasing transparency of the ownership and control of UK companies is the purpose of the recent People with Significant Control (PSC) legislation introduced on 6 April 2016. As a result of the PSC regulations, and depending upon the size of the shareholding, owners of shares in UK companies may no longer be able to shelter behind nominee shareholders.
Prior to 15 March 2016, a nominee shareholder protected the identity of the beneficiary of the shareholding (i.e. the actual owner) and was an individual, company or LLP that held shares on behalf of the actual owner. In the context of a company, a nominee shareholder is named publicly as the holder of the shares but is accountable to the actual owner of the shares, who remains anonymous. Generally, the relationship between the nominee shareholder and the actual owner is governed by a Declaration of Trust (or other confidential nominee agreement) which establishes that it is the actual owner who owns the shares, not the nominee.
The new requirements
Under the 2016 Regulations, any PSC of a company or LLP must have their details included on a public register. This provides greater transparency regarding the ownership of UK registered companies and LLPs.
A number of new conditions have been incorporated into the Companies Act 2006, the main one being that a company or LLP must provide a statement detailing which persons hold, directly or indirectly, more than 25% but not more than 50% of the shares in the company.
BIS Guidelines
The Department for Business Innovation and Skills (BIS) has published non-statutory guidance which gives examples of the types of relationships and roles that a person can have with a company, and that may imply that such a person is deemed to have significant influence or control over that company. For a summary of this guidance published by BIS, please click here.
BIS indicates that if shares or rights in a company are held by a nominee, the company should treat them as if they were held by the person for whom the nominee is acting. If this individual is a person with significant control, a company must enter the actual owner’s details on the PSC Register.
Details to be published on the Register
If you are a person with, or deemed to have, significant control over a company, you will have your name, service address, country or state of usual residence, nationality, date of birth and your usual residential address recorded in the company’s PSC Register.
Companies or LLPs with significant control will have their corporate or firm name, registered principal office, legal form, governing law and registration number shown. The PSC Register will also note the date upon which the person became registrable and indicate which of the significant control conditions the individual satisfies.
It’s important to note there is a positive duty on companies to take reasonable steps to find out if there are any registrable members and there is also a positive duty on individual shareholders to disclose their interest if they should be named on the PSC Register. Our previous article on People with Significant Control can be found here.
Should you require any advice on matters relating to these rules or any other corporate law reforms proposed, please do not hesitate to contact a member of our Corporate & Technology Group.
