On 6 April 2016, the Small Business, Enterprise and Employment Act 2015 brought into effect changes to the Companies Act 2006 that required certain U.K. companies and LLPs to keep and maintain a register of any persons exercising significant control over that company or LLP (“PSCs”).

On 26 June 2017, significant changes to the PSC regime were introduced following the U.K.’s transposition of the European Union’s Fourth Anti Money Laundering Directive (“4AMLD”) through the enactment of the Information about People with Significant Control (Amendment) Regulations 2017 and the Scottish Partnerships (Register of People with Significant Control) Regulations 2017 (together, the “2017 Regulations”). This article provides a summary of the principal changes introduced by the 2017 Regulations.

Key changes

Extension of the PSC regime

Previously, companies subject to Chapter 5 of the Disclosure Rules and Transparency Rules were not subject to the PSC regime. However, with effect from 24 July 2017, only those companies whose voting shares are admitted to trading on a regulated market within the European Economic Area will now fall outside the PSC regime.

The significance of this change is that companies listed on prescribed markets such as AIM and the NEX Exchange now fall within the scope of the PSC regime. Companies whose shares are admitted to trading on the London Stock Exchange’s Main Market will continue to fall outside the scope of the PSC regime.

With effect from 24 July 2017, certain unregistered companies that previously fell outside the PSC regime will also be required to keep and maintain a PSC register. Additionally, Scottish partnerships comprised entirely of corporate bodies and Scottish limited partnerships (“Eligible Scottish Partnerships”) will also be required to file information regarding their PSCs at Companies House (but will not have to maintain a PSC register).

Timescales for delivering PSC information to Companies House

Previously, a company’s / LLP’s PSC information was required to be updated on an annual basis through the filing of the annual Confirmation Statement at Companies House (unless an entity had already elected to maintain its PSC register at Companies House).

However, from 26 June 2017 (or 24 July 2017 for those entities mentioned in the previous section other than Scottish Eligible Partnerships), and in a move towards the event-driven filing requirements of 4AMLD, an entity falling within the PSC regime must now:

  • amend its PSC register within 14 days of receiving information regarding any relevant changes to the information entered on its PSC register; and
  • file notification of any such relevant changes at Companies House within 14 days of updating its PSC register.

Scottish Eligible Partnerships had 14 days from 24 July 2017 to file information regarding their PSCs at Companies House and are required to file a notification of any subsequent relevant changes to that information within 14 days of receipt of that information.

Failure to comply with these timescales will constitute a criminal offence.

Practical considerations

AIM and NEX Exchange-listed companies should be aware of the burdensome obligation of having to comply with the requirements of both Chapter 5 of the Disclosure and Transparency Rules and the PSC regime, Such companies, along with Eligible Scottish Partnerships and unregistered companies that are now subject to the PSC regime, should begin making enquiries to identify whether they have any PSCs and subsequently update their registers (other than Eligible Scottish Partnerships) and make filings at Companies House.

Additionally, given the shift towards event-driven filings and the stringent timescales introduced through the implementation of 4AMLD, those entities subject to the PSC regime should review and consider who may constitute a PSC on an ongoing basis to ensure that all amendments to its PSC register, and any related filings at Companies House, are made within the statutory timescales.

Future changes

Whilst both companies and legal practitioners alike are still becoming accustomed to the changes to the PSC regime introduced by the transposition of 4AMLD, it is interesting to note that the Fifth Anti Money Laundering Directive (“5AMLD”) is on the horizon, which proposes to introduce even greater transparency on the identity of beneficial owners. Whilst not yet confirmed, 5AMLD could result in a lessening of the thresholds that need to be met by a person in order to constitute a PSC.

The extent to which any such changes will be introduced into U.K. law could well depend upon the timing of the European Union’s implementation of 5AMLD given the U.K’s impending departure from the European Union.

Further developments regarding 5AMLD are expected over the upcoming months.

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