Applying to limited companies, limited liability partnerships (LLPs) and Societas Europaea (SEs), the Act – which came into force from 6 April – introduces a raft of measures designed to streamline company filing procedures, bolster growth for UK businesses and promote transparency. So what changes are being implemented of which entrepreneurs and small businesses, as well as key advisers, need to be aware?
People with significant control (PSC)
Among the most significant changes centres on achieving greater transparency in business ownership and control through the introduction of a register of PSC. This includes any individuals who hold more than 25 per cent of company shares or voting rights, have the right to appoint or remove the majority of directors or have significant influence or control over the company, or a trust or firm which has such control.
Companies will now need to take reasonable steps to find out if there are people who are suspected to have significant control. This will involve contacting these people to confirm if they’re a PSC. If confirmed, companies must obtain the PSC’s information and record it in the PSC register. This process also applies to companies owned or controlled by legal entities that fit one of the criteria above. However, in this case, the entity is known as a “registrable relevant legal entity” on the PSC register.
It’s important to understand that a company’s PSC register must never be empty. For example, companies that are taking reasonable steps to identify PSCs must reflect that in the register, and companies that confidently have no PSCs must also state that in the register. There are statements set out in the law that companies must use in these circumstances, and more help can be found in the guidance which we have created.
The information on a company’s PSC register must be kept up to date, and all changes in a company’s PSCs must be recorded on their register. Failure to comply is a criminal offence.
From 30 June 2016, a company’s PSC information will be available on the public register at Companies House. This will be delivered via the new confirmation statement, which is replacing the annual return. As well as keeping their own PSC register up to date, companies must ensure their annual updates to Companies House include all historic and current information on their PSCs. It will be 12 months before a full public register is available to searchers.
People seeking to incorporate new companies from 30 June 2016 will have to provide PSC information on the application for incorporation. Such firms will be able to apply to incorporate electronically, as we move to become a 100 per cent digital organisation.
Public and protected information
Companies must provide all PSC information to Companies House, but some details, like the PSC’s residential address and day of birth, will be withheld from the public register. However, all other PSC information will be available in a similar vein to how director information is currently shown.
In exceptional circumstances, where PSCs are at serious risk of violence or intimidation, applications can be made to Companies House to have all PSC information withheld from the public domain. However, companies still need to send all their PSC information, which will still be made available to law enforcement agencies. Full guidance about how to protect PSC information is also available.
Simplified company filing requirements
The government wants to help businesses by simplifying filing requirements, and improving the accuracy and integrity of the public register. This means that more important changes are taking effect from 30 June 2016 beyond the PSC register. The key change is that the annual return is being replaced by a confirmation statement. More specifically, companies will now just need to confirm that any and all existing information held by Companies House is correct, or provide the most updated information, on at least a once yearly basis.
Information which must be reviewed, confirmed or updated includes the newly implemented PSC register, as well as details of registered office, director (or member) and location of registers, shareholder information, statements of capital and industrial classification code. All this goes hand in hand with a £13 fee, payable once per year, regardless of how many times a confirmation statement is filed.
Taken together, these changes are designed to increase corporate transparency and give businesses, investors and the general public greater confidence in business. By streamlining compliance processes, we will be able to stimulate the UK’s economic growth and prosperity, as well as the overall health of the UK economy.
Meryl Jones is head of business change at Companies House.
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