Our Health and Social Care team has been representing Care England to date in its application and will be preparing the case for the next month’s hearing on 20-21 March.
Key to note is that the rules do not apply to registered societies/community benefit societies (formerly industrial and provident societies) - but they will apply to any companies within the same group.
What do we need to do now?
Don’t panic! If you haven’t familiarised yourself with the rules yet then the important thing to note is that the PSC Register shouldn’t be empty. It may be relatively easy to formulate (see ‘What next?’ below), but if you have a complicated group structure or are unsure, you can, as an interim measure, create a PSC Register that states that the company “hasn’t completed taking reasonable steps to find out if there is anyone who is a registrable person or a registrable relevant legal entity”.
The rules are unhelpfully complex, but at a basic level you will need to identify whether there are any individuals or entities that satisfy any of the following conditions so that they are a ‘person with significant control’ (a “PSC” – i.e. an individual or a local authority) or a ‘relevant legal entity’ (a “RLE” – i.e. a corporate entity):
- they hold, directly or indirectly, more than 25% of the shares in the company;
- they hold, directly or indirectly, more than 25% of the voting rights in the company;
- they hold the right, directly or indirectly, to appoint or remove a majority of the board of directors of the company;
- they have the right to exercise, or actually exercise, significant influence or control over the company; or
- they have the right to exercise, or actually exercise, significant influence or control over the activities of a trust or firm and the trustees of the trust or members of the firm meet one of the first four conditions.
These conditions can be met indirectly – this scenario is shown in the group structure examples below.
Once you have identified your ‘PSCs’ or ‘RLEs’ then you will need to:
- Enter the details (see the table below) of the RLEs into the PSC Register straight away;
- Confirm with each PSC and RLE that they agree that they hold this status and (assuming they do) ask them to confirm the particulars set out in the table below are correct. The rules require you to issue a notice to any identified PSCs or RLEs, unless they have already confirmed this information to you (note that a failure to respond to any such notice within 1 month of the date of the notice is a criminal offence); and
- Once your PSCs have confirmed, insert their details into the PSC Register.
From a practical perspective we anticipate that it will be rare for a housing association to have any PSCs, except for LSVTs that have retained their local authority ‘golden share’. Any RLEs are also likely to be other group companies – the simplest way to obtain the confirmations required may therefore be for the parent to simply confirm to its subsidiaries that it is an RLE and confirm the particulars for the PSC Register. Remember that registered societies will not be RLEs.
Going forward, you will need to maintain the PSC Register and, from 30 June 2016, you will need to include details of your PSCs and RLEs when you file your annual ‘Confirmation Statement’ (the new name for the annual return) at Companies House – further guidance on this is expected from BIS.
What ‘particulars’ need to be listed on the Register?
The following information should be included on the Register:
PSCs (i.e. individuals)
RLEs i.e. corporate entities
|Name||Name of company|
|Nationality||Registered or principal office|
|Date of birth||Legal form and governing law|
|Country of residence (and which part of the UK, if resident in the UK)||Company registry and registration number, if applicable|
|Usual residential address – N.B. this will not be public||Date of becoming a registrable RLE (for existing RLEs, this will be 6 April 2016|
|Service address||Which of the above conditions 1-5 are met by the RLE|
|Date of becoming a PSC (for existing PSCs, this will be 6 April 2016)|
|Which of the above conditions 1-5 are met by the individual|
Some practical examples
Group structure 1
In the above group structure, both the parent and DevCo will need to have a PSC Register.
The parent will need to include the Council as a PSC. It may have other PSCs if any other members meet the conditions above.
Assuming the parent owns all of the shares in DevCo, the parent is the only RLE. Conditions 1-3 are likely to all apply and this should be stated in the PSC Register.
DevCo does not need to mention the Council as an indirect PSC, because it is noted in the parent’s register (and because it doesn’t have a majority share in the parent – see group structure 2).
Group structure 2
In the above group structure, the parent is not required to keep a PSC Register. The parent is the sole shareholder of DevCo but, because it is a registered society, it is not a registrable RLE and cannot therefore be inserted into DevCo’s PSC Register.
However, because the conditions outlined above can also be satisfied indirectly, DevCo needs to look ‘up the chain’ at who the shareholders of the parent are. The parent has several shareholders, including the Council that holds one third of the voting rights. However, this is not enough to meet the requirements for the Council to be classified as a PSC for DevCo, because it does not have a controlling share in the Parent.
In this scenario, DevCo’s PSC Register will state that it has no “reasonable cause to believe that there is any registrable person or registrable relevant legal entity in relation to the company".
All group structures differ and the regulations and guidance are fairly complex, so if you have any questions when formulating your own PSC Register please contact Sarah Greenhalgh.
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