Company Law Update
You may be aware that elements of The Small Business, Enterprise and Employment Act 2015 are already in force. Those elements include prohibition of bearer shares, and exclusion of a director’s day of birth from the Companies House public register.
It is expected that new provisions relating to new rules on beneficial ownership information will be implemented on 06 April 2016, although this date may be subject to change.
A new Part 21A will be inserted into the Companies Act 2006 (the “Act”) and includes:
- Requirement for companies to keep a register of people with “significant control” over the company and make that register public.
- Obligations for companies to gather information and obligations on others to supply information, to enable that register to be kept.
- Provisions to omit certain material from the publicly available information.
Defining Controlling Interests
A controlling interest does not need to be registered at Companies House. However, the company must retain a register of people who have controlling interests (referred to as the “PSC Register”) The PSC Register must be available for anyone to inspect.
The PSC register of controlling interests will be added to the company’s existing statutory books. These should be created on incorporation and updated throughout the company’s lifetime.
They should be kept at the company’s registered offices, unless Companies House has been notified of a separate location. Companies can volunteer the information to Companies House if they choose.
A person is considered to have significant control for the purposes of the Act if:
- They hold (directly or indirectly) more than 25% of the shares in the Company; or
- They hold (directly or indirectly) more than 25% of the voting rights in the Company; or
- They hold the right (directly or indirectly) to appoint or remove a majority of the board of directors; or
- They have the right to exercise significant influence or control over the Company; or
- Trustees of a trust or members of a firm (as defined in section 1173(1) of the Companies Act 2006) that are not a legal person, meet one or more of the other specified conditions in their capacity as such or would do if they were individuals. The individual must also have the right to exercise, or actually exercises, significant influence or control over the activities of that trust or firm.
The PSC Register may affect nominee shareholdings and the privacy they used to enjoy. Although, it doesn’t have to be shown on the Annual Return at Companies House, the general public could request the Company Books from the company and they must be provided without charge.
From the date the new rules come into force the books must include the PSC register.
Please note that PSC Register needs to contain certain, prescribed information under the Act.
Companies not complying with the provisions of the Act are committing an offence, as is each defaulting officer.
What you need to do before the new rules come into force
You should first locate your company books and make sure they are up to date.
We often deal with companies that have lost or failed to maintain Company Books. If you think you may be in this position, we recommend asking your accountants or other professional advisers whether they have these, and seek professional advice immediately if they cannot be found.
Determining whether you will need to disclose your shareholding in a Company or whether the Company must disclose a person’s interest in the Company is one of the most important requirements in the new legislation. You should do this as soon as possible.
