The Persons of Significant Control register system goes live this month. It will have important effects on companies, partnerships, directors and others.
NEW regulations could put thousands of businesses and ‘persons with significant control’ – including people who have retired – on a criminal footing this month, a major legal firm says.
Businesses, directors and even retired business leaders could face criminal prosecution if they don’t comply with the new ‘person with significant control’ (PSC) rules, lawyers at Maclay Murray & Spens have warned.
And while the new system takes effect on 6 April the guidelines covering its implementation have only recently been issued.
The PSC Register was introduced by the Small Business Enterprise and Employment Act 2015 and is underpinned by a stringent criminal liability regime.
The penalties that can be applied for non-compliance include fines and/or imprisonment, and apply to companies, limited liability partnerships (LLPs) and persons with significant control.
The date for its introduction was recently confirmed as 6 April 2016 and statutory guidelines were issued.
Derek McCombe, a corporate partner with MMS said: “Although the premise of the new PSC Register appears relatively straightforward, the latest guidance shows it is far-reaching and complex, in order to close down potential loopholes and achieve its stated aims.
“The meaning of the term ‘significant influence or control’ is wide-ranging.
“Even business leaders who have perhaps retired or taken a back seat in a family business, were the board of directors still to follow their instructions, could be caught by the new regulations.
“Crucially, the obligation is not only on companies and LLPs but also on individuals who are PSCs to ‘put their hands up’ and be placed on the register, otherwise they potentially face criminal sanctions.”
The new rules apply to all non-listed UK companies and LLPs, which from 6 April 2016 must have in place a publicly available PSC Register.
From 30 June 2016, PSC information must also be filed at Companies House annually when a company or LLP next completes its confirmation statement (formerly its annual return).
A person must be included on the PSC Register if he or she has: direct or indirect ownership or control of more than 25% of a company’s shares or voting rights; has the right to appoint or remove a majority of the board of directors; or can exercise significant influence or control over the company. Anyone who has significant influence or control over the activities of a trust or firm, which itself would meet any of the first three conditions, is also obliged to be named.
“Companies, LLPs and PSCs should act now to ensure compliance as doing nothing at this stage is not an option. A PSC register must be in place by 6 April 2016,” McCombe said.