What is the PSC regime and do we need a PSC register?

Who is a PSC?
A PSC is a person who owns or controls a company. They can be an individual or another company and there can be more than one PSC. If the PSC is a company, it is referred to as a registrable legal entity (RLE). 

What does a company need to do under the PSC regime?
A company needs to take reasonable steps to determine if there is anyone who is a registrable person or RLE in relation to that company. Usually, this will be by serving notice and asking those that they suspect may be a registrable PSC or RLE to confirm what the nature of their interest is. The company is also entitled to question other individuals that it deems would be likely to have information in relation to a PSC or RLE.

If there is such an individual or entity, they should be added to a company’s PSC Register, and the relevant filings then made at Companies House.

What steps should be taken to determine a PSC?
A company needs to consider:

1. whether the PSC conditions are satisfied by the identified ‘person’ or (see ‘What are the PSC conditions?’ below); 
2. if the identified person is a company, whether they are an RLE (i.e. are they required to keep a PSC Register, or listed on an EEA regulated market, or are they subject to a specified equivalent overseas regime); and 
3. whether the PSC or RLE is registrable.

Each of these point is considered in further detail below.

What are the PSC conditions?
To be a PSC, one or more of the following four conditions must be satisfied (there is a fifth in relation to trusts and partnerships, which we will not consider here):

1. a person holds, directly or indirectly, more than 25% of the shares in the company;
2. a person holds, directly or indirectly, more than 25% of the voting rights in the company;
3. a person holds the right, directly or indirectly, to appoint or remove a majority of directors of the company; and/or
4. a person has the right to exercise, or actually exercises, significant influence or control over the company.

If a person fulfils one or more of the first three conditions, it is not necessary to consider whether they also fulfil the fourth condition. In respect of the fourth condition above, government guidance provides that a person being a director of a company will not, on its own, result in them meeting this condition.

What is an RLE?
To be capable of registration as an RLE, an entity must satisfy all of the following conditions:

• It must itself be a legal entity for the purposes of the PSC regime.
• It would meet one or more of the specified conditions to be a PSC if it were an individual.
• It must be subject to its own disclosure requirements under the PSC regime.

What is a registrable PSC or RLE?
In simple terms, a PSC or RLE is registrable where:

• it holds any direct interest in a company; or
• it holds an indirect interest in a company through a chain of ownership that does not include an RLE.

What if the company is in a group?
If a company is a subsidiary in a group of companies, it must look up the ‘chain’ of companies to find the first individual or RLE that satisfies the criteria above at “What is an RLE?”. If one or more of the companies in the chain are RLEs, only the RLE directly above a company will be registrable in relation to it.

Where the ownership structure is complicated or there are overseas elements, this element will require careful consideration and legal advice should be sought.

What information needs to be recorded in a company’s PSC Register?
A company’s PSC Register must include the required particulars of each person with significant control over the company who is a registrable individual or RLE: 

• For any PSC, the required particulars are: their name; their service address; their nationality; their date of birth; their usual residential address; and details of any particulars that are protected from disclosure to the public. 
• For any RLE, the required particulars are: corporate name; registered or principal office; legal form of the entity and law by which it is governed; register of companies in which is entered; and registered number.

The following details must also be entered in the PSC register for each PSC/RLE:

• details of the date on which the individual/entity became registrable; and 
• which of the five conditions for being a PSC/RLE they meet, with quantification of the interest where relevant. If relevant, the quantification must include the level of the PSC’s shares and voting rights within the following categories: over 25% up to (and including) 50%; more than 50% and less than 75%; and 75% or more.

Are there any deadlines applicable to the PSC regime?
Changes to a company’s own PSC register must be made 14 days from confirmation of the relevant change (for PSCs) or 14 days from the date when the company receives details of the change (for RLEs). Companies are then required to update their PSC information at Companies House within 14 days of updating their own PSC Register.

Comment

Our clients find PSC Registers the most complicated of the statutory registers to get right. The rules around who is and is not a PSC can be difficult to get your head around, especially where there are overseas interests. Recently, we had the other party’s advisors on a deal maintain that the PSC Register of a subsidiary should list both its 100% shareholder and the ultimate beneficial owner (which was wrong). However, it is important to maintain correct registers as otherwise the officers of a company will be committing an offence.

If you would like advice on the PSC regime or the preparation of PSC Registers, a member of our Corporate & Commercial team will be delighted to assist you.