Disclosure of beneficial ownership information - PSC register requirements

Action for US entities with investments in EU and UK companies

Recent legislation enacted in the EU and the UK introduces new rules which require collation and disclosure of beneficial ownership information. This information will, in most instances, be available on the public record.

US based entities, particularly private companies and private equity funds need to take action to ensure that their subsidiaries in the EU and UK are compliant with the new legislation and to understand what information regarding beneficial ownership will need to be made publically available in the EU and UK.

This brief overview deals specifically with requirements in the UK. Similar requirements are in force in other EU countries. Failure to comply with the requirements is a criminal offence. 
The rules are complex and you should seek advice from your usual RSM contact or from the US desk team in London.

What does this mean for entities with investments in the UK?

From 6 April 2016, all UK companies (that are not exempt) and LLPs must keep a register of individuals or legal entities that have significant control (either direct or indirect) over them. The register will include details of people with significant control (PSCs) and relevant legal entities (RLEs) and the relevant PSC information must be filed at Companies House where it will be on the public record. Failure to comply is a criminal offence on the part of the company directors in the UK and the PSCs.

What action is required now?

  • Identify companies and LLPs in your structures that need to keep a PSC Register.
  • Identify PSCs and RLEs for each company or LLP – remembering that this includes both direct and indirect control.
  • Determine whether each PSC or RLE identified is registerable or non-registerable.
  • Record the relevant information on the PSC register.
  • Disclose the information in the annual confirmation statement to Companies House.
  • Update the information in the PSC register.

How RSM can help

We can assist you in interpreting the rules as they relate to your corporate or fund structures and the identification of PSCs and RLEs. We can also advise you on the contents of the PSC register.

What exemptions are available?

The rules apply to all UK companies and LLPs unless they are exempt by virtue of:

  • being an issuer covered by the Disclosure and Transparency Rules (eg a UK company listed on AIM or the LSE);
  • having voting shares traded on a regulated market in an EEA state other than the UK or on certain markets in Israel, Japan or the USA.

Who is a PSC?

A PSC is an individual satisfying one or more of the following conditions:

  1. holds, directly or indirectly more than 25 per cent of the shares in the company (or the right to share in more than 25 per cent of surplus assets on the winding up of an LLP);
  2. holds, directly or indirectly, more than 25 per cent of the voting rights in the company or LLP;
  3. holds the right, directly or indirectly to appoint or remove the majority of the board of directors of the company or the management of the LLP;
  4. has the right to exercise or actually exercises significant influence or control over the company or LLP; or
  5. has the right to exercise, or actually exercises significant influence or control over a trust or firm which would itself satisfy any of the above 4 conditions if it were an individual.

What is a RLE?

An RLE is a body corporate or firm that is a legal person under the law by which it is governed and which would be a PSC were it an individual and which is subject to its own disclosure requirements. An entity is deemed subject to its own disclosure requirements if it meets the exemptions above in relation to being a DTR issuer or having shares admitted to trading on an EEA regulated market or certain other markets in Israel, Japan or the USA or if it is required to keep a PSC register itself.

Consequently, privately held overseas entities would not generally meet the definition of an RLE and would not therefore be included on the PSC register. However the requirement still exists to look through these entities to identify other PSCs or RLEs that should be recorded on the register.

What information is recorded on the PSC register?

The following information is recorded on the register for each PSC:

  • full name;
  • date of birth;
  • nationality;
  • country and state of residence;
  • service address;
  • usual residential address;
  • date of becoming a PSC;
  • which conditions of being a PSC are met and details regarding the extent of control; and
  • whether an application has been made to protect the PSCs information from public disclosure.

The information on the Register must be made available to any individual or organisation on appropriate request. The above information, with the exception of residential address and full date of birth will also be on the public record at Companies House. 

The above information is for general guidance only, please contact Mark Harwood or your usual RSM contact for specific advice regarding your circumstances.