In its recently published 2018-2019 Business Plan, Companies House has set out its robust approach to companies not complying with their Persons with Significant Control (PSC) requirements.
Since June 2016 UK companies have been required to hold an up-to-date record of persons exercising significant control in relation to their company. They are also compelled to notify Companies House each time they make a new entry or update their PSC register. However, there are some companies which have not fully understood their obligations.
What is a PSC?
A PSC is someone who owns or controls a company. Most PSCs are likely to be people who hold:
- more than 25% of shares in the company;
- more than 25% of voting rights in the company; or
- the right to appoint or remove the majority of the board of directors.
If a PSC holds more than 25% of the shares in a company, they are likely to hold the same amount of voting rights. A company’s register of shareholders and articles of association should contain information on voting and other rights.
A PSC might influence or control a company through other means. This could be directly or on behalf of someone else - for example, someone who has the final say over decisions relating to the running of the business. However, this condition will only apply in limited circumstances.
Failure to notify Companies House
Earlier this month news broke that the Health Secretary, Jeremy Hunt, failed to notify Companies House of his interest in Mare Pond Properties Limited, a company allegedly set up to purchase seven luxury flats in Southampton. Mr Hunt has a 50% interest in the company and so he is obliged to inform Companies House that he is a PSC. By failing to do so he risked breaching anti-money laundering rules and potentially a criminal penalty. He publically apologised for the error stating that it was an honest administrative mistake. A spokeswoman for Mr Hunt commented that it was his accountant who had made the blunder in the Companies House filing.
This news came as Companies House published its Business Plan for 2018 - 2019. The Plan outlines a robust approach to corporate transparency and tackling money laundering. In particular, Companies House focuses on the PSC regime. It states that the information on the PSC register is integral to the Government’s commitment to corporate transparency and to ensuring that the UK is a trusted and fair place to do business. In relation to the PSC information Companies, House intends to take various steps to promote and ensure compliance. The key points are:
- Companies House will contact companies who it believes have misunderstood the requirements with the view of ensuring that records are corrected;
- it will pursue companies that have not provided PSC information in their confirmation statement (which companies are required to file each year to confirm that the information Companies House holds on them is accurate and up to date);
- it will follow up with companies and PSCs where they have issued notices to their PSCs (asking the PSCs to provide them with information), or restrictions (where a PSC has failed to provide information), to ensure they update the information on their company records; and
- seek compliance from companies where there has been a complaint about missing or incorrect PSC information.
Mr Hunt’s unfortunate error and the publication of Companies House’s Business Plan for 2018 - 2019 are timely reminders of the need to review your company’s internal records and Companies House filings.
If you think your PSC register is incorrect or inaccurate then please contact the Corporate and Commercial team.