Business owners have to prepare for a change to company legislation that requires them to register individuals with ‘significant control’ over the company.
Under the proposals, which have been laid down in the Small Business, Enterprise and Employment Act 2015, all businesses that are not subject to specified separate disclosure requirements must now create and maintain a register containing details of any person with ‘significant control’.
This is generally defined as a person who directly or indirectly holds more than 25 per cent of the shares or voting rights in the company.
Also it includes any person who has power to appoint or remove the majority of the board of directors or has the right to exercise significant influence’ or ‘control’ over the company.
Anyone who has the right to exercise significant influence or control over a trust or firm (such as a partnership) that is not a legal entity, which in turn satisfies any of the first four conditions over the company, is also considered a person with significant control under the legislation.
The newly created Person with Significant Control (PSC) Register must be available for inspection and up to date information must also be provided to Companies House at least once per year.
It means companies will need to produce and hold their own PSC Registers from 1 January 2016 and must submit it to Companies House by 6 April 2016, as part of their confirmation statement, which now replaces the traditional annual return.
Unfortunately, this is an additional legislative burden which adds more red tape to businesses, but this new law imposes obligations both on companies and on persons with significant control.
Not completing a PSC Register and filing it with Companies House could mean that the business and its directors face criminal liability. To add to this the company can freeze the interest of any individual whom the company deems as being eligible to be placed on the PSC register until they comply. Dividends, voting and other rights could also be affected while the interest is frozen.
We at AIT say businesses should not wait and act now to seek professional accountant’s advice if they are unsure of what to do due to this legislation.
If you would like more information, please give AIT a call on 0121 711 1957 and we will be happy to help. Call us today.