Further updates to PSC guidance and regulations ahead of April implementation

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In December 2015 the Department of Business, Innovation and Skills (BIS) issued draft guidance on the meaning of “persons with significant influence or control” in the context of PSC registers, which companies are going to be required to hold and keep available for inspection from April 2016 – please find our summary of this initial draft here.

Following a short consultation period amendments to this guidance have been made and the final draft sent to Parliament for approval. Also laid before Parliament last week were the draft Register of People with Significant Control Regulations 2016, which amongst other things sets out the companies who exempt from the PSC register requirements.

Many of the amendments to the BIS guidance are fairly superficial – where aspects of the guidance have been identified as not being wholly clear changes have been made to address this. For instance, it has been confirmed that if a person meets one or more of the first three conditions (i.e. over a 25% shareholding, over 25% of the voting rights, or a right to appoint or remove a majority of the board), then it will not be necessary to make a further note on the register as to whether that person meets the fourth condition of exercising or having the right to exercise significant influence or control over the company.

Arguably more substantive amendments have been made to the category of “excepted roles” (known as “safe harbours” in earlier drafts of the guidance), which will not, on their own, result in a person being deemed to possess significant influence or control. Added to the roster of excepted professional advisors are investment managers and tax advisors, while it has also been confirmed that associations, networks, and professional standards organisations that set out common rules and standards for their members (e.g. the National House Building Council for house builders) will not, by virtue of their role alone, be considered as persons of significant influence or control.

Other examples of scenarios where a person will have significant influence or control have also been added, including where the non-primary functions of a person could result in them being deemed to be a PSC. The example given is a director who also owns important assets such as crucial intellectual property rights or is the source of key relationships, and who uses this additional power to influence decision making.

Further clues on how the new PSC registers will operate in practice have been revealed with the production of the draft Register of People with Significant Control Regulations 2016. The Regulations confirm that companies who have voting shares admitted to trading on certain foreign markets will not have to keep a PSC register. Schedule 1 of the Regulations provides a definitive list of these markets, but they can be generally summarised as including regulated markets in EEA states along with certain markets in Israel, Japan, Switzerland and the USA. The reason for the exemption is that the disclosure requirements of these markets are sufficiently similar to the PSC regime and also publically accessible.   The regulations also provide protections for the residential addresses of PSCs and confirm that the fee companies may charge for providing copies of their register will be £12 per request.

Subject to parliamentary approval, the statutory guidance and the bulk of the Regulations will come into force on 6 April 2016. BIS has also indicated that it will issue additional, non-statutory guidance to assist businesses with the forthcoming changes. If you have any questions about what your business needs to do to comply with the upcoming PSC requirements, or if you need assistance with any other Corporate & Restructuring matter, please do not hesitate to contact me on 0800 689 0831 or at nick.pickup@forbessolicitors.co.uk.

Nick Pickup

About Nick Pickup

Nick Pickup is a Solicitor within the Corporate and Restructuring team at Forbes Solicitors. Nick’s blogs cover his specialism of work on mergers and acquisitions, business start up’s, joint ventures, shareholder issues, company restructures and general company advice.
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