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New Transparency Rules will put an Extra Burden on Companies

A new law aimed at making it easier to see who owns and controls companies will bring with it far-reaching responsibilities and a lot of extra admin.

Most UK companies will have to keep a register of People with Significant Control (PSC) and make it accessible to the public.

People with Significant Control

It will contain details on any person who owns or controls more than 25% of a company's shares or voting rights or otherwise exercises control over a company or its management, such as the appointment or removal of a majority of board members.

Information that must be disclosed will include the person's name, date of birth, nationality, address and details of their interest in the company. To protect an individual's privacy, some personal information on the register does not have to be made public.

Failure to comply with the new rules will be a criminal offence.

The idea behind the legislation is to make it harder for British companies to be used as a cover for criminal activities. However, it will place a significant extra burden on management. The people who control a company are often different to those listed as shareholders.

Company & Individual Obligations

There will be an obligation on companies to take steps to identify people they know - or suspect - have significant control, including giving notice to PSCs and others to obtain information.

There is also an obligation on individuals to tell a company that they have significant control over it in cases where the company has not identified them or requested the information. Some people with significant shareholdings in UK companies who do not want their information to be made public may want to take action to change how they hold their investments but such measures could have tax implications.

Firms will have to provide a statement on their PSCs to Companies House and update it every year.

The Bill applies to all UK private and public companies, apart from publicly traded companies that already report under DTR 5 transparency rules.

Register

Subsidiaries of UK companies that keep a PSC register will not have to maintain one of their own.

The legislation is laid out in the Small Business, Enterprise and Employment Bill that will introduce the new Part 21A of the Companies Act 2006.

The Bill is in the final stages of its passage through Parliament and there are still some details being finalised but PSC registers are expected to come into effect next year.

Wise & Co can help clients maintain their PSC register. For further information and advice please contact us.

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