Companies House PSC changes from 26 June 2017

Why a change?

Just as companies and their advisers have got to grips with the PSC requirements, things are changing.

As part of implementation of the EU Fourth Money Laundering Directive (‘4MLD’), which took effect on 26 June 2017, the PSC regime received an update. With the overall aim of further targeting money laundering and terrorist financing, the June implementation takes place irrespective of Brexit – at least as long as the UK retains EU membership, it continues to apply EU legislation.

PSC reporting frequency

From 26 June 2017, PSC information is no longer updated annually on the confirmation statement. Instead, to meet the 4MLD requirement for the central register to be “adequate, accurate and current”, companies need to report PSC changes to Companies House as and when they happen. Alongside reporting changes to Companies House, companies are still required to maintain their Register of People with Significant Control.

Common changes that companies will now need to report directly to Companies House, as well as updated in the PSC register, include:

• The emergence of a new PSC, RLE or other registrable person – for example, if someone buys shares in the company and their ownership exceeds 25% of the company’s share capital for the first time
• Changes in specified details of a PSC, RLE or other registrable person – for example, a PSC changes their residential address or an RLE company changes its name
• The nature of an existing PSC’s control over the company changes – for example, they move between different shareholding “tiers” by buying or selling shares
• Someone ceasing to be a PSC or RLE – for example, they sell shares so that they now hold 25% or less of the company’s shares or voting rights

Reporting changes promptly to Companies House in this way brings the requirements for PSCs more in line with the existing rules for company officers – where changes to a director’s or secretary’s details have long needed to be filed on an event-driven basis rather than included in the confirmation statement.

Companies also need to report various specified statements as they become or cease to be true. These are mostly relevant while the company is identifying and obtaining details of PSCs, or where there is good reason to believe there are no persons with significant control over the company.

Changes must be reported using forms PSC01 to PSC09 (or the equivalent forms for LLPs, LLPSC01 to LLPSC09). Paper versions of each of these forms are available on Companies House’s website.

After a relevant change occurs, companies and LLP have 14 days to update their PSC register and then a further 14 days to submit the change to Companies House. Therefore, there’s a maximum filing period of 28 days from the date of the event in which to file. To avoid any threat of penalties, this means companies must always be active in reviewing, updating and chasing (potential) PSCs for information where necessary – and then promptly making required submissions to Companies House.

Changes to the confirmation statement

Companies still have to file a confirmation statement each year. However, confirmation statements filed from 26 June (even if they relate to an earlier “confirmation date”) cannot be used to update PSCs, but instead to record any updates to the company’s:

• Statement of capital
• Shareholders
• SIC codes
• Whether the company is trading on a market and its DTR5 status

While changes to PSCs no longer feature, the confirmation statement should still be used to record where a company is exempt from the requirement to deliver information on PSCs.

Other entities potentially subject to the PSC regime

The scope of the PSC regime is being extended to cover all active Scottish Limited Partnerships (SLPs) and also General Scottish Partnerships (SPs) where all the partners are corporate bodies. From 24 July 2017, these entities will need to report PSC information and changes with Companies House within 14 days.

Going further, the government believes it may be necessary for all entities incorporated in the UK and capable of having a beneficial owner to be covered. For example, that affects unregistered companies, including those formed under Royal Charter or by private Act of Parliament.

The exemptions that currently apply to DTR5 companies will also change from 26 June. Unless a company is traded on an EEA or Schedule 1 specified market, it will no longer be exempt and instead will need to hold information about their PSCs and submit details of any changes to Companies House. The companies affected are primarily those with shares listed on AIM or the NEX Exchange Growth Market.

Entities newly affected will need to record PSC information in much the same way as UK companies and LLPs already subject to the regime, but potentially with amended “nature of control” conditions. Many of the affected organisations, for example, do not have shareholders so the reasons applied to them will be based on other means of control than a traditional shareholding in a company.

The government has confirmed that overseas companies with merely a branch or place of business in the UK will remain out of scope, although they may be subject to a similar level of disclosure in their company’s home country.

Protection of PSC information

Certain PSC information which forms part of the public record, notably the day of a PSC’s date of birth and usual residential address, is accessible only by specified public authorities. Going forward, access is extended to financial intelligence units, competent authorities and other entities that have an obligation to carry out customer due diligence.

All PSC information held on the public record will now also be available to law enforcement agencies, with no exceptions.

Practical considerations

Companies and their advisers need to look to review how the changes impact them and their processes. As well as the need to start reporting PSC changes promptly to Companies House, you may want to consider action in particular circumstances:

1. With the extent of the regime widened to other types of entity, you’ll need to check whether you (or, for professional advisers, any of your clients) are newly subject to the updated PSC regime.
2. Those companies which haven’t yet filed a confirmation statement might want to submit it “early”, before 26 June. By doing so, they could file everything as part of the confirmation statement. Otherwise, by filing after 25 June, they need to make a separate filing for each and every PSC change that has taken place in the confirmation period.
3. Similarly, companies that have already filed a confirmation statement need to be aware of PSC changes that have occurred since. While they would have intended to include those changes in the next confirmation statement, instead they’ll now need to submit them separately shortly after 26 June.