The requirement for companies to compile and maintain their PSC Registers came into force in April 2016 with the aim of increasing transparency around company ownership. The Register should contain details of those shareholders who own more than 25% of shares or voting rights in the company or otherwise exercise ‘Significant Control’: the Persons with Significant Control (PSCs).
Where a change in shareholdings causes a change in the identity or extent of control of the PSCs the company’s PSC register will need to be updated. Until now this information would only be updated at Companies House on the company’s Confirmation Statement (which must be filed at least once a year). There was no requirement to update Companies House each time shares changed hands or a change in the PSC Register occurred. This could mean that a company’s publicly available information about the identity of its shareholders might be up to a year out of date.
What has changed?
In an effort to increase company transparency further, as of 26 June 2017, a company is required to file a form at Companies House whenever a change is made to the PSC s (forms PSC01 to PSC09). A company now has 14 days to update their PSC register after a change and then a further 14 days to file the information at Companies House. This requirement has been made in order to ensure consistency with the EU Fourth Money Laundering Directive. Failure to update Companies House could result in a company and its officers committing a criminal offence therefore compliance with this update is essential.
How does this affect companies?
There is still no rule that requires Companies House to be notified when the ownership of shares in a company changes. However, this new rule means that a fundamental change to shareholding will probably require a notification to Companies House – albeit in the context of PSCs and not the definitive list of shareholders. So now, when a company is sold and all the shares change hands, this will be apparent from the publicly available Companies House data much earlier than under the old regime.
If you require further advice and guidance on the new PSC law change, please get in touch with the corporate law team at Farleys today on 0845 287 0939 or submit your enquiry through our online form.