What is the PSC Register?
From April 2016 all private companies and LLPs have been required to maintain a Persons of Significant Control (PSC) Register. This is a record of the people who own or control the business which is available for public inspection. Notably, it does not replace the registers of directors and members, these must also be present and kept up to date.
A director or secretary will have to:
- make sure the register identifies those with significant control over the company and details their information. This includes their name, date of birth and service address;
- the register must include the nature and extent of the PSC’s control. For example, it must list the amount of shares the person holds;
- provide this information to Companies House annually as part of Form CS01 (which has replaced the Annual Return);
- update the register when it changes; and
- make the register available for inspection at the company’s registered office.
Who is a PSC?
A PSC is an individual:
- who holds more than 25% of shares in the company (or more than 25% of the remaining assets if the LLP were to be wound up); or
- who holds more than 25% of voting rights; or
- who holds the right to appoint or remove the majority of the board of directors (or those involved with management if the business is an LLP); or
- who is otherwise able to exercise significant control over the company. This could include someone having the independent power to change the nature of the business; or.
- who holds the right to exercise or actually exercises significant control over a trust or company that meets any of the other 4 conditions.
Companies House has an excellent video explaining how to identify a PSC.
If a PSC refuses to give information this constitutes a criminal offence. Failure to take reasonable steps to ascertain who is a PSC is also a criminal offence.
If your business does not have a PSC, a register will still need to be kept and state the following: “The company knows or has reasonable cause to believe that there is no registrable person or registrable relevant legal entity in relation to the company.”
Why should your business have a PSC?
It makes the company transparent and promotes trust and accountability. As such, it could persuade potential investors to invest in the company. Without a PSC register it may be difficult to attract investors due to the lack of transparency.
In any event, it is compulsory and liability can arise for failure to comply to keep this register. Failure to comply carries an initial fine of £1,000 (or maximum 2 year prison sentence) and, until this is rectified, there is a £100 daily fine.
This blog post was written by Karl Lynch. Karl is a student working in the business firm within the Student Law Office. Karl has experience in a variety of industries but hopes to obtain a training contract at a local commercial law firm. He has a passion for business, in particular corporate governance.