Requirements at a Glance

What Constitutes a 'Registrable' Individual?

As per the current legislation, for an Individual to be considered 'registrable' in relation to the Company/SE/LLP (and, thus, have their details disclosed in the PSC Register), they must meet one (or more) of the five conditions below:

1. They must directly or indirectly hold more than 25% of the shares in a UK Company
2. They must directly or indirectly hold more than 25% of the voting rights in a UK Company
3. They must directly or indirectly hold the right to appoint or remove a majority of directors in a UK Company or LLP
4. They must otherwise have the right to exercise, or actually exercise, significant influence or control over a UK Company or LLP
5. They must have the right to exercise, or actually exercise, significant influence or control over the activities of a trust or firm which is not a legal entity, but would itself satisfy any of the first four conditions if it were an Individual.

A PSC is, by definition, an Individual (local or national government or a corporation sole being the only exceptions – see below for more information on these types of entities), and not a legal entity, though legal entities may also be subject to disclosure requirements in certain circumstances (see following sections for more information).

What Constitutes a 'Relevant Registrable' Legal Entity (RRLE)?

If any of the conditions above are met by a legal entity, its details must equally be displayed within the PSC Register if the entity is both relevant and registrable in relation to your Company/SE/SLP/SP/LLP.

According to the Department for Business, Energy & Industrial Strategy, "a legal entity is relevant in relation to your Company if it meets any one or more of the 5 conditions set out in the previous section and:

• it keeps its own PSC Register (i.e. it is a UK Company, SE, SLP, SP or LLP)
• it is subject to Chapter 5 of the Financial Conduct Authority's Disclosure and Transparency Rules (DTRs); or
• it has voting shares admitted to trading on a regulated market in the UK or European Economic Area (other than the UK) or on specified markets in Switzerland, the USA, Japan and Israel" (refer to List of Regulated Markets).

A relevant legal entity (RLE) is registrable in relation to your Company/SE/LLP if it is the first relevant legal entity in your Company's ownership chain.

Figures 1-4 below and their respective explanations were taken from the Guidance on the Register of People with Significant Control produced by the Department for Business, Energy & Industrial Strategy. They illustrate different Companies in the same chain of ownership. In Figure 1, Company B is a UK Company that keeps a PSC Register and owns 100% of the shares in Company A. It is, therefore, the registrable RLE in relation to Company A and its details must be entered on Company A's PSC Register. Company A is not required to look further at its chain of ownership for any indirect interests held via Company B as these are not registrable in relation to Company A. Consequently, the details of Company C, which is also an RLE, as well as the details of Person 1 will not be added to Company A's PSC Register.

Figure 1 - Company A's PSC Register

Figure 2 - Company B's PSC Register

Figure 3 - Company C's PSC Register

Guidance for People with Significant Control Over Companies, Societates Europaeae and Limited Liability Partnerships

In Figure 2, Company C is a UK Company controlling Company B by 100%. Its details will be entered on Company B's PSC Register. As the first RLE in Company B's chain of ownership, Company C is registrable in relation to Company B only. Similarly, Person 1's details are not required to be shown on Company B's PSC Register, despite the fact that they hold an interest in Company B indirectly. Instead, Person 1 is only required to be entered on Company C's register as shown in Figure 3 above.

The Department for Business, Energy & Industrial Strategy's guidance also states that: "If Person 1, for example, were to hold a direct interest in Company A which, met one or more of the Specified Conditions, with an indirect interest through Companies B and C, Person 1's details, in addition to Company B's details, must be entered on Company A's PSC Register. Person 1 should be entered on Company A's PSC Register as holding the total number of the shares held directly and indirectly." Figure 4 below was inserted to illustrate this. According to the aforementioned guidance, "in this situation, it might be unreasonable to expect Company A to identify Person 1 as a PSC, and there is a separate obligation on Person 1 to inform Company A that he or she must be entered on Company A's PSC Register. Company A must then enter information about Person 1 on its PSC Register (in this scenario Company A would use the statement 'The person holds, directly or indirectly, 75% or more of the shares in the Company.' to show that person 1 holds 20% directly and 80% indirectly)." Failure to inform the Company where the Individual knows or ought reasonable to know that they are a PSC of that Company is classified as a criminal offence.

Figure 4 - Company A' PSC Register

Guidance for People with Significant Control Over Companies, Societates Europaeae and Limited Liability Partnerships

Likewise, in the event that the immediate/direct holding entity of a UK Company, SE, SLP, SP or LLP is a non-relevant legal entity (for example an overseas unlisted Company), the entities located higher up in the hierarchy (the indirect interest holders) may be considered relevant and registrable if:

• They are themselves a RRLE or an Individual and
• They are a majority stakeholder (i.e. they own more than 50% of the shares or voting rights in the holding Company, or are a member of the holding Company and have the right to appoint or remove the majority of the board of directors or have the right to exercise or actually exercise, dominant influence or control over the holding Company)

By being the first relevant entity in the chain, their particulars must be recorded in the (initial) Company's/SE's/SLP's/SP's/LLP's PSC Register.

For example, in the screenshot below we have a situation whereby a UK Company A is immediately controlled by 100% by Company B. Company A cannot display Company B's details on the PSC Register because Company B is an overseas, non-relevant Company (i.e. it does not meet the conditions described at the beginning of this section).

Figure 5 - Company A's PSC Register

Guidance for People with Significant Control Over Companies, Societates Europaeae and Limited Liability Partnerships

Instead, the next immediate level of interest (i.e. the ownership and control of Company B) must be assessed. In this example, Company B has Company C as a majority stakeholder (holding 100% of the shares/voting rights), also not an RLE because it is an overseas Company and does not meet the conditions explained earlier in this section. Its details cannot be entered on the PSC Register. Company A must therefore look further at the ownership and control of Company C. Person 2 is the majority stakeholder in Company C as it holds more than 50% of the shares/voting rights. This means that they are a PSC in relation to Company A and their details must be disclosed in Company A's PSC Register.

Other 'Registrable' Persons (ORPs)

If your Company, SE, SLP, SP or LLP is owned or controlled by an 'other registrable person' that meets the conditions described at the beginning of this article, such as:

• A government or government department (local or national)
• An international organisation whose members include two or more countries, territories or their governments or
• A corporation sole (a legal entity consisting of a single incorporated office occupied by a single person).

They are also subject to disclosure requirements and their details must be entered in the PSC Register. Statutory Entity Details lists the statutory information to be disclosed in the register regarding these entities, noting that there is no requirement to confirm this information before it can be entered on the PSC Register.

Taking Reasonable Steps

On behalf of their Company/SE/SLP/SP/LLP, Users must take "reasonable steps" to find out if there are people or legal entities that have significant control or influence over their Company/SE/SLP/SP/LLP by satisfying one or more of the five conditions listed at the beginning of this article.

Companies/SEs/SLPs/SPs/LLPs should contact persons that they believe or have reason to believe are PSCs (or others who might know them) to confirm they meet one or more of the aforementioned conditions, and confirm that the information required for entry on the PSC Register is correct (see Statutory Entity Details for more information regarding the details to be obtained and stored within Diligent Entities for disclosure on the Register). If the person does not reply to a Company's request for information, the Company/SE/SLP/SP/LLP may issue warning notices informing them that they plan to restrict the person's interest in the Company, with the effect that the interest held cannot be sold or transferred and any agreement to sell or transfer that interest is void (see Populating your PSC Register and/or List of Notices for more details and examples of notices).

The Company/SE/SLP/SP/LLP may also send notice to someone who knows about the interest held, rather than to the person personally. This may be a nominee, professional advisor or family member. The same obligation to reply applies, together with the failure to respond to a notice without valid reason also being a criminal offence.

As required by legislation, copies of all communications to potential/known PSCs should be retained, and this can be achieved using the Letter/Notice production functionality offered by the application (see Populating your PSC Register for more details).

In addition, all stages of your investigation, including the type of notices issued, must be recorded within Diligent Entities (via the Additional Matters and/or the Add/Update PSC/RLE/ORP Wizards) for disclosure within the PSC Register, and reported to Companies House through the filing of the appropriate form.

Changes to Group Structure

It should be noted that changes to the Company's/SE's/SLP's/SP's/LLP's group structure will not automatically update the PSC records, so Users must update these manually.

Change to PSC/RRLE/ORP particulars

Where the particulars for a PSC/RRLE/ORP have changed, and subsequently updated in Diligent Entities (by using the standard Wizard functionality), these details will automatically be reflected in the PSC Register and the relevant PSC form will be produced automatically by the application. However, where the conditions, or Additional Matters, have changed, Users must update the PSC records and generate the appropriate PSC form manually.

PSC Information on Forms

Users must also be aware that PSC information must be disclosed for Companies/SEs/SLPs/SPs/LLPs upon incorporation (see Displaying PSC Details in the UK Incorporation Form for more information on these forms). Furthermore, where changes to the PSC information for your Company occur, these must be recorded in the Register within 14 days from the date of the event, and notified to Companies House within another 14 days, by submitting the appropriate PSC form. Should you want to use Diligent Entities to generate your Incorporation and/or PSC forms, it is extremely important that the data stored within the application is accurate and constantly maintained up to date. The steps to be taken to verify your data, identify potential PSCs/RRLEs/ORPs, record and modify their details within the Diligent Entities application, and generate the relevant forms are all described in the next topics.

For information on how to activate these features, refer to the Blueprint OneWorld v10.1a Release Notes and/or the System Customisation User Guide. Alternatively, contact your Customer Success Manager to arrange training or the Support team for assistance.