The use of large up-front fees and disproportionate deposits has already resulted in significant cost consequences for one care provider.
What do we need to do now?
The legislation imposes obligations on the company that is required to maintain a PSC Register, rather than on any person or entity that should be included in that Register. If you haven’t familiarised yourself with the rules yet then the important thing to note is that the PSC Register should never be empty. It may be relatively easy to formulate (see ‘What next?’ below), but any company that is part of a complicated group structure or for other reasons unsure can, as an interim measure, create a PSC Register that states “The Company has not yet completed taking reasonable steps to find out if there is anyone who is a registrable person or a registrable relevant legal entity”.
Councils will want to think about any companies they have an interest in and what they may need to do to ensure that this action is taken. The company 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” – and in this sense “person” can include 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.
‘Significant influence” or ‘significant control’ are alternatives and include:
- being significantly involved in the management and direction of the company (e.g. a person who is regularly consulted on and influences board decisions); and
- having recommendations always or almost always followed by those who hold the majority of the voting rights in the company.
Directors should not be listed as PSCs even where there are fewer than 4 directors and they have more than 25% of the voting rights at Board level, as this is an ‘excepted role’. Individuals holding these roles will therefore not generally be PSCs unless the role "differs in material respects or contains significantly different features from how the role or relationship is generally understood." This may include, for example, if a director also owns important assets or has key relationships that are important to the running of the business (e.g. intellectual property rights), and uses this additional power to influence the outcome of decisions related to the running of the business. They will then be deemed to have ‘significant influence or control’ of the Company and should be listed as a PSC because of this.
Once the company has identified its ‘PSCs’ or ‘RLEs’ then it 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 the company to issue a notice to any identified PSCs or RLEs, unless they have already confirmed this information to the company (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 the company’s PSCs have confirmed, insert their details on to the PSC Register.
For local authority trading companies and JVCos, we anticipate that the local authority will be a PSC and will therefore appear on the PSC Register for these entities. If you have not heard from any companies that you are involved in to take the above steps, a prompt to those companies to take action now would be warranted.
Going forward, those companies will need to maintain the PSC Register and, from 30 June 2016, will need to include details of their PSCs and RLEs when they file their 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 (deemed individuals i.e. local authorities/ government bodies)
RLEs (corporate entities)
|Name||Name||Name of company|
|Nationality||Registered or principal office||Registered or principal office|
|Date of birth||Legal form and governing law||Legal form and governing law|
|Country of residence (and which part of the UK, if resident in the UK)||Date of becoming a registrable PSC (for existing PSCs, this will be 6 April 2016)||Company registry and registration number, if applicable|
|Usual residential address – N.B. this will not be public||Which of the above conditions 1-5 are met||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 registrable PSC (for existing PSCs, this will be 6 April 2016)|
|Which of the above conditions 1-5 are met by the individual|
For more information
If you have any queries when formulating your own PSC Register, or cooperating with a company that must formulate one, please get in touch with Gayle Monk.
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