The Register of People with Significant Control (PSC) Regulations, which are being implemented as part of the Small Business, Enterprise and Employment Bill, will take effect on 6 April 2016.
From this date, all businesses incorporated in the UK will be required to keep a register of anyone who has a significant shareholding and/or operating interest. This is defined as anyone who owns more than 25 per cent of the firm’s shares or 25 per cent of its voting rights; has the right to appoint or remove senior level staff or who exercises or has the right to exercise control over the business and its activities.
In addition to maintaining the PSC register, the board will need to demonstrate that “reasonable steps” have been taken to identify those with significant control and to file information at Companies House about them as part of the firm’s annual confirmation statement. This information will effectively become a matter of public record and, in addition to specifying the extent of each individual’s interest in the business, their name, address, date of birth and nationality will be given.
And according to Roy Botterill, corporate law partner at Shakespeare Martineau, the PSC register represents yet another burden for private businesses, “the vast majority of which have been operating entirely legitimately whilst enjoying the privacy that comes from running a business without the backing of public shareholders.”
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According to Shakespeare Martineau, this degree of transparency could cause disruption for some private businesses. Botterill explained: “The introduction of the PSC register is intended to promote transparency and avoid fraud. But it does so in a manner which removes the individual right to privacy. This could discourage investors and cause significant disruption for some businesses. Some investors could even choose to withdraw their investments. For example, individuals who are well known locally, or nationally, may not wish to make their investments known to all.
“There may also be scenarios where greater awareness of the business interests of key individuals could have a bearing on commercial dealings. For example, a business may be in the process of acquiring a land bank for future development and may not wish the seller to know exactly how much land is owned already. Making information on beneficial ownership readily available could force up the price of the land being sold.”
To comply with the new law, he explained, boards should write to shareholders to inform them about the changes and to seek confirmation that any shares held in their name are owned for themselves alone. Firms should also be prepared to act on any suspicious or incomplete information received. It may also be appropriate to approach people with significant control individually to explain the impact of the new rules and to discuss the matter with them.
With the value of bets placed via mobile devices expected to reach £66bn by 2018, we talked with the CEO of a company set on making the industry more transparent and educating gamblers so as to reduce the risk of them loosing their money.
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