Important new developments to the people with significant control regime

Posted: 18/07/2017

The Government recently announced and implemented new regulations extending the ambit of the people with significant control (PSC) regime.

The Information about People with Significant Control (Amendment) Regulations 2017 (the Regulations) were published in full for the first time on 23 June and came into force three days later, on 26 June.

The PSC regime already in force obliged UK companies, other than some publicly traded companies, and UK limited liability partnerships to review their ownership structure to determine and report accurately the existence or otherwise of PSCs. The Regulations have come about because of the UK’s obligation to comply with the requirements of the EU’s Fourth Money Laundering Directive.

The Regulations extend the scope of the PSC regime to both AIM and NEX companies which were previously exempt on the basis that they were subject to compliance with rule 5 of the FCA’s Disclosure and Transparency Rules. As well as AIM and NEX companies, the regime extends to unregistered companies, Scottish limited partnerships and Scottish qualifying general partnerships. Companies traded on regulated markets, including the main market of the LSE, will continue to be exempt from the regime.

From 26 June 2017, all companies and LLPs that fall within the PSC regime have to update their PSC register within 14 days of becoming aware that a person meets the PSC conditions. In addition, that person must be registered and the central public register updated within a further 14 days. These time limits are considerably shorter than the six month period proposed by the Government in its November 2016 consultation.

There is, although not significant, time for within-scope, and newly within-scope, companies and partnerships to adapt to the changes and comply with the extended regime: unregistered companies, companies that have admitted to trading on prescribed markets such as AIM and the NEX Exchange and eligible Scottish partnerships are only obliged to investigate their ownership and control from 26 June 2017 and then register from 24 July 2017.

The Government has published updated versions of both its statutory guidance on the meaning of significant influence and control (in draft) and its non-statutory guidance for companies, Societates Europaeae, LLPs and people with significant control which reflect the changes brought about by the Regulations.

The revised guidance also notes that where a PSC is deceased, the PSC should remain on the PSC register until such time as their interest is formally transferred to its new owner.

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