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            Register of people with significant control - Q&A for companies limited by guarantee

            Date: 12/04/2016

            1. What is a register of people with significant control?

            A register of people with significant control (otherwise known as a "PSC Register") is a new statutory register which certain UK companies and all UK limited liability partnerships ("LLPs") will be required to keep.  It will contain details of all those people or legal entities with control over the company or LLP in question.  Failure to comply with the new requirements is a criminal offence.

            2. Where can I get detailed guidance on the requirement to keep a PSC Register?

            The rules relating to the PSC Register are quite complex.  This Q&A only gives a very brief summary of the key points in relation to companies limited by guarantee.  We would recommend that you take advice or review the government guidance before attempting to complete your PSC Register.

            The government guidance can be found here.

            We would recommend starting with the document headed "PSC register summary guidance" and then, for more detail, reading the document headed "PSC guidance for companies, LLPs and SEs".  You will also see some statutory guidance and you must have regard to this in certain circumstances (see point 14 below).  Please be aware that at the moment the guidance is regularly being updated.

            3. Do I have to keep a PSC Register?

            All UK companies limited by guarantee must keep a PSC Register.

            The requirement also applies to:

            • UK LLPs;

            • other UK companies (including community interest companies) except for some public companies i.e. those subject to Chapter 5 of the Disclosure and Transparency Rules ("DTR 5") (which includes Main Market and AIM companies) or whose voting shares are admitted to trading on one of a number of specified stock markets; and

            • UK societates europaeae.

            The requirement does not currently extend to co-operative societies, community benefit societies or Charitable Incorporated Organisations.

            4. Are the requirements the same for companies limited by shares, companies limited by guarantee and LLPs?

            They are very similar but there are some differences to account for the different nature of the three types of entity.

            5. When do I have to start keeping a PSC Register?

            The requirement to keep a PSC Register is already in force (it came in on 6 April 2016).

            6. If I have to keep a PSC Register what do I have to do?

            Your obligations can be broken down into four basic steps:

            • Identify - Take reasonable steps to identify each person with significant control ("PSC") and confirm their information.

            • Record – Use the information you have obtained to complete your PSC Register.

            • File - File the information at Companies House.

            • Maintain - Keep the information up to date.

            7. When do I have to file the information at Companies House?

            Any new company or LLP incorporated after 30 June 2016 will need to submit the information along with the other incorporation documents.  Existing companies and LLPs will need to file the information when they submit their next confirmation statement (which will replace the annual return) after 30 June 2016.

            8. Who will qualify as a PSC?

            An individual will be a PSC if he or she meets one or more of the five specified conditions (the "Conditions").

            9. What are the Conditions?

            An individual will be a PSC of a company limited by guarantee if:

            • he or she holds, directly or indirectly, a right to share in more than 25% of the company's profits or capital ("Condition 1");

            • he or she holds, directly or indirectly, more than 25% of the voting rights ("Condition 2");

            • he or she holds, directly or indirectly, the right to appoint or remove the majority of the board of directors ("Condition 3");

            • he or she has the right to exercise, or actually exercises, significant influence or control over the company ("Condition 4"); or

            • the trustees of a trust or the members of a firm meet any of Conditions 1 to 4 (in their capacity as such) and the individual has the right to exercise, or actually exercises, significant influence or control over the activities of that trust or firm ("Condition 5").

            Condition 1 is modified for companies limited by shares.  Conditions 1 and 3 are modified for LLPs.

            10. What is an RLE?

            A PSC is, by definition, an individual and not a legal entity (e.g. a company or LLP).  However, the rules talk about also being able to register "relevant legal entities" or "RLEs" in some circumstances.

            An entity is an RLE if it:

            • is a legal entity;

            • meets one of the Conditions; and

            • is subject to its own disclosure requirements (i.e. it has to keep a PSC Register, is subject to DTR 5 or has its shares admitted to trading on one of the specified stock markets).

            11. When do I register an RLE?

            You register an RLE if it is the first legal entity you come to when investigating a particular chain of ownership.  Ordinarily, you will not need to investigate or record who owns or controls that RLE.

            12. What if a legal entity which is not an RLE meets one or more of the Conditions?

            If the entity is not an RLE you cannot register it in your PSC Register.  Instead, you need to see whether there is anyone with a 'majority stake' in that entity and, if they are a PSC or RLE, register them instead.

            13. Does it matter which Condition is met?

            Yes.  The PSC Register must show each of the Conditions the PSC or RLE meets.  However, if the PSC or RLE meets any of Conditions 1 to 3 you can ignore Condition 4 in relation to that PSC or RLE.

            14. What do I need to do if rights are held on behalf of a trust or firm?

            You may need to register the holder(s) of the rights if they meet any of Conditions 1 to 4.  In addition, you should also establish whether anyone has the right to exercise, or actually exercises, significant influence or control over the trust or firm for the purposes of Condition 5.  Separate statutory guidance explains the concept of "significant influence or control".

            15. When looking at the Conditions is there anything in particular I need to look out for?

            Yes.  It is advisable to review the government guidance and, in respect of Conditions 4 and 5, you must have regard to the statutory guidance that has been issued.

            Some particular points to note are as follows:

            • Nominees – the rights are treated as being held by the person for whom the nominee is acting.

            • Joint holdings – each joint holder is treated as holding the entire interest.

            • Joint arrangements – if two or more people have an arrangement as to how to exercise their rights, each person is treated as holding all the shares or rights.

            • Rights only exercisable in certain circumstances e.g. weighted voting rights – these are only counted if the circumstances are within the person’s control or the rights have actually arisen.

            16. What steps must I take to get the information I need?

            You need to take 'reasonable steps'.  This will, among other things, require you to review your register of members, articles of association and members' agreements.  You may also need to serve notices on members (or others you think they may have relevant information) requiring them to supply or confirm information.  The government guidance contains suggested wording for these notices.

            Ultimately you must do what you think a reasonable person would do if that person knew what you know and you must not stop until you have the information you require or there is nothing more you can reasonably do.

            17. Are recipients of notices I send under an obligation to respond?

            Yes. Failure to respond to a notice requesting information in relation to a PSC Register within a month is a criminal offence (as is providing false information).

            18. Are there any other sanctions for failure to respond to a notice?

            Yes.  You can serve a 'warning notice' and, if the information is still not forthcoming, you can serve a 'restrictions notice'.  Among other things, a restrictions notice prevents the person's rights being transferred or exercised.

            19. When can I enter the information I have received in relation to PSCs and RLEs?

            You can only enter information in relation to PSCs and RLEs when you have all the information you need and, in relation to PSCs, that information has been confirmed as being accurate by the PSC or someone acting on their behalf.

            20. If I don't have the information I need should I just leave my PSC Register empty?

            No. The PSC Register must always contain something even if it is a statement that there are no PSCs or that you have not yet finished taking reasonable steps.

            21. Is there any particular wording that must be used in the PSC Register?

            Yes. The government guidance specifies the wording that must be used for particular statements.

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