A Handy Guide to the PSC Register

by | Mar 28, 2017 | Business

A Handy Guide to the PSC Register

As you might be aware, all the companies registered in the UK are required to create and maintain a Register of PSC (People with Significant Control) since 6th of April, 2016. Naturally, this would have raised a host of questions in your mind.

Theoretically, the mandate requires the companies to take “reasonable steps” to ascertain if there are people in the company who hold a certain amount of influence in the decision-making process of the company. If this is the case, then a PSC register is a must. But, how to identify such individuals? ‘Reasonable steps’ is a vague method with no clear meaning; and yet, one thing is clear- as the owner of the company; you need to comply with the rules. Failure to do so is a direct violation of HMRC guidelines and can result in penalties.

To ease your dilemma, here is a quick guide to what you should do.

Qualifications for PSC

The power and definition of PSC vary from company to company, depending upon the size and structure of the company. But one this is definitive; PSC are the people who hold sway in the decision-making process of the company. Identifying them is not an easy job, but you can take the help from the following features:

  1. He/she could appoint or remove most of the company’s board.
  2. He/She possesses more than a quarter of company’s voting rights.
  3. He/She exercise a significant control over the company (in theory or practice).
  4. He/She holds more than a quarter of company’s shares.
  5. He/She possesses a significant control over a trust/firm which is not legal.

Hopefully, these traits will help you identify the PSCs in your company. Once that is done, you can move ahead with registering their details in the PSC register. If you are a small company, these people would be few and well-known to you.

However, in a few cases, the situation can get tricky. Such a case could arise if:

  • The shareholders are actually holding their shares for someone else, or directed to vote by that person.
  • Company has opted for Articles of association.
  • The shares are actually held by trust/firm without a legal identity of its own.
  • Certain shareholders are granted special rights via a shareholder’s agreement.
  • There are certain possible arrangements between shareholders to be executed.
  • Any agreement that imparts special rights to individuals.
  • The shares are held by corporate firms; in such cases, not all details are required to be registered.

Situations can get even more complicated, where you may have to make do with the limited information you possess. If there is a chance of a mistake, it should be done with caution. What you will need to show are the list of registered members, all kinds of agreements (including shareholder’s agreement), other documentation regarding voting rights in the company’s decisions and articles of association. These actions serve an important purpose: showing the Companies House that you have carefully and thoroughly checked for all the PSCs and the aforementioned ‘reasonable steps’ have been taken. A detailed record of all steps must be kept in case some future investigations take place.

Case of No PSC

In no way is having a PSC a requirement for any company. If your company doesn’t have any PSC, you can simply mention that to the Companies House. In case a PSC is added in the future, all you would have to do is update your PSC register and mention the duration of absence of any PSC.

Checking possible PSCs

Once you have figured out your potential PSC or Relevant Legal Entity (RLE), you might want to get further information about them and confirm that they are indeed the person of significant status. This could be done by giving a notice under section 790D of Companies Act 2006 to any person who could be the PSC or registrable RLE. The process could be long, but can be hastened if done online.

Writing to individual PSC

When addressing an individual, there are two things that must be kept in mind:

 

  1. You should ask for the confirmation regarding the status as PSC. The confirmation must be clear and act as a proof against any future disputes.
  2. Asking for verification of all existing information about the individual, and asking for any more information that might be required for registration.

Writing to corporate entity

When you have to deal with a corporate entity, there are three things that must be done:

  1. Confirmation of the status of registrable RLE
  2. Confirm or reject any parts of the existing particulars in the notice.
  3. Fill out any missing information.

Contacting Intermediaries

It might so happen that you do not have enough information about a possible PSC and gaining the information from the person is failing.

In such cases, you could seek others (known as intermediaries) like family and friends for more information about the person. This is done by serving with a form 790D, which makes the intermediary bound to reply within 30-days. If the information you receive is relevant, you need to inform the intermediary regarding the same.

In case the potential PSC is actually holding shares on behalf of someone else, you could ask him to share details of the person he is holding the shares for.

How to update the PSC register?

Once you get the confirmation and the required details about the PSC or registrable RLE, you would need to fill up the details in the PSC register without delay.

The PSC register is a work-in-forever-progress, and so it requires constant updating. Even when there is no PSC, there must be a remark regarding this. If the process of setting up a new PSC register is going on, this must be mentioned in existing register and reflected in the new register once prepared.

 

The PSC register must also be updated if the reply of the form 790D is awaited or the person has failed to reply even after the required 30-day period. You must get the gist now: updating your PSC register is every possible scenario is a must. Failure to do so can result in severe action from the HMRC. To be on the safer side, it is better to create a small department dedicated to this job.

Here are the major changes that require updating the PSC register:

  • Addition of a new PSC or RLE, especially when one buys a significant portion of the shares.
  • Changes in the details of the PSCs or RLEs.
  • Change in the level of control of the PSC upon the company.
  • Deletion of a PSC or RLE from the register, which happens when a person sells most or all of his shares.

PSC Register and Companies House

Companies House, as you are aware, is responsible for maintaining a database of information about the affiliated companies which is available to the public; this is why it requires regular updates regarding any changes.

The annual return is replaced by confirmation Statement since 30th June 2016. So the confirmation statement is the aptest opportunity to submit your PSC register updates alongside other things to the Companies House. Once that is done, any new changes need only be reflected in the annual Confirmation statement.