Changes to the Companies Legislation

20 August 2015

Celia Worthington, Partner, discusses prospective changes to the Companies Act 2006 brought into effect by the Small Business, Enterprise and Employment Act 2015

Under current laws every company is required to keep a register of its members which shows who the members of the company are and the shares held. Notice of a trust may not be entered on the register and is not information that is filed at the Companies Registry when submitting annual returns. This means that where shares are held in trust details of the holder of the beneficial interest in the shares are not available to the public.

All this is about to change when the Small Business, Enterprise and Employment Act 2015 brings into effect changes to the Companies Act 2006. The draft statutory instrument implementing the changes is still out for consultation and the relevant guidance on same is due out in the autumn. It is expected that the changes will take effect on 1 January 2016.

If implemented UK companies will be required to draw up a register of people who have ‘significant control’ over the company such persons being referred to as ‘PSCs’. A PSC is a person or entity who:-

  • Holds directly or indirectly more than 25% of the voting rights in a company
  • Can exercise or control the exercise of more than 25% of the voting rights
  • Has the right or controls the right to appoint or remove a majority of directors
  • Otherwise actually exercises significant influence or control over the company regardless of his/its/ their shareholding or official powers

Once implemented it appears that details of the beneficiaries of trusts, if they control the trust, will be information that will become public. Companies will need to prepare and maintain their own register of PSCs and provide the information to the Companies Register. Private companies may opt not to maintain their own register and instead provide the necessary information to Companies House only. 

The information that needs to be disclosed includes:-

  • Name 
  • Address for service 
  • Country or state of residence 
  • Nationality
  • Date of Birth
  • Usual residential address (which as with directors details can be protected from public inspection) 
  • Date upon which the person becomes a PSC and how he controls the Company 

The onus is on companies to investigate whether there are PSCs and to obtain details for registration and on PSCs to come forward with their details if they are aware that they are PSCs. 

Even if a company has no PSCs a register should be maintained stating that there are no such registrable people or entities. 

The legislation is still in draft form and could change. Guidance is due to be published in the autumn once the legislation is finalised and at that stage company directors will need to consider the legislation and its effect on their companies to ensure that the necessary steps are implemented.

 

Celia Worthington, senior partner of the Commercial Department of Worthingtons Solicitors Belfast Office 

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