The introduction of the PSC register in April 2016 was a major change for UK companies, requiring them to keep a register of anyone with significant control or influence over them (for further details of the PSC regime see Five simple steps to the new PSC register). The current regime only applies to unlisted companies and limited liability partnerships but a new consultation is considering extending the obligation to other UK entities, including companies listed on AIM.
Why are changes being proposed?
Despite the results of the Brexit referendum earlier this year, the UK continues (for now) to be a member of the European Union and so is required to implement and apply EU legislation. This includes the EU Fourth Money Laundering Directive which contains provisions aimed at increasing corporate transparency and must be implemented by 26 June 2017.
The Directive requires member states, including the UK, to hold adequate, accurate and current information on the beneficial ownership of companies and other legal entities incorporated in their territory. Although our existing PSC regime meets most of the Directive’s requirements, full implementation is likely to require some amendments or additions. A new discussion paper sets out the possible changes that may need to be made.
What are the proposed changes?
Listed companies were excluded from the PSC regime on the basis that they are already subject to appropriate disclosure obligations via the FCA’s Disclosure Guidance and Transparency Rules.
However, this approach is considered to be incompatible with the EU Directive’s more broadly framed scope. In particular, whilst the Directive exempts companies listed on a regulated market (such as the London Stock Exchange Main Market) there is no express exclusion for companies listed on prescribed markets such as AIM or the Intercapital Securities and Derivatives Exchange (ISDX). The discussion paper therefore asks whether these entities should be brought within the PSC regime and, if so, what the associated costs and benefits may be.
Other currently exempt entities which may become subject to the PSC regime include Scottish limited partnerships, Scottish partnerships, unregistered companies and open-ended investment companies.
The other significant change being proposed is amending the existing requirement to update PSC information filed at Companies House from at least once every 12 months to a shorter timescale of within six months of a change occurring. Clearly this will affect companies and LLPs already subject to the PSC regime as well as any new entities to which the regime is extended.
As noted above, the relevant requirements have to be implemented by June next year, although the European Commission has published a proposal to bring this forward to 1 January 2017. The current consultation on amendments to the UK’s PSC regime closes on 16 December 2016 after which secondary legislation will need to be developed. Even if the implementing date is not brought forward, any new entities brought within the regime will not have long to prepare for this increase in administration.