15 May 2017

New anti-money laundering measures are coming into force and will impact the 'People with Significant Control' regime

Article 30 of the Fourth Money Laundering Directive, which relates to beneficial ownership of corporate and other legal entities, will bring about changes to the UK's existing 'People with Significant Control' (PSC) regime. Currently, every UK company and LLP (with a few exceptions for certain listed entities) is required to file at Companies House information regarding PSC with their annual confirmation statement.

See 1) 14 March 2016 PSC register deadline approaching!; and 2) 12 September 2016 Further company law changes implemented under the Small Business, Enterprise and Employment Act 2015.

Changes to PSC filings at Companies House

Companies House has taken a stringent view to satisfy the first requirement of Article 30 – the need for corporate entities to "obtain and hold adequate, accurate and current information on their beneficial ownership, including the details of the beneficial interests held".

From 26 June 2017, companies will have 14 days to update their PSC register and a further 14 days to file the updated information with Companies House. PSC information will no longer be updated using the annual confirmation statement but on separate PSC forms to be filed each time a change in PSC information occurs. Companies will continue to confirm the PSC information annually using the confirmation statement.

PSC regime expansion

The Department for Business, Energy & Industrial Strategy (BEIS) is currently analysing feedback from the consultation it ran in November 2016 regarding the requirement to maintain a central register of beneficial ownership information. BEIS has provisionally determined that the following types of UK incorporated entities not already covered by the PSC regime will fall within the scope of the Directive:

  • European Cooperative Societies (SCE), Open Ended Investment Companies (OEICs) and Investment Companies with Variable Capital (ICVCs)
  • Scottish Limited Partnerships
  • Scottish Partnerships, each member being a limited company
  • Unregistered companies subject to the Unregistered Companies Regulations 2009 (this includes some Royal Chartered bodies, City of London Livery Companies, Guilds and other learned societies and professional bodies but not universities or overseas based bodies)

AIM companies may also find themselves caught by the Directive. The current PSC regime exempts companies from the requirement to maintain a PSC register if they are subject to Chapter 5 of the Financial Conduct Authority's Disclosure Guidance and Transparency Rules (DTR 5). In relation to quoted companies, the Directive allows an exemption for companies with shares traded on a regulated market, such as the London Stock Exchange's main market, but does not expressly exclude companies traded on a prescribed market, such as AIM. The UK government may consider that implementation of the Directive means AIM companies can no longer benefit from the DTR 5 exemption to maintain a PSC register but this is yet to be confirmed.

No date has been confirmed for the PSC regime expansion but for new entities brought within the scope of the Directive, information on beneficial ownership will need to be publicly available in a similar way to that of the PSC register (i.e., a separate register maintained on Companies House).

Ban on corporate directors

We reported last year that the Small Business, Enterprise and Employment Act 2015 introduced a ban on corporate directors, another part of the UK government's wider reforms in corporate transparency.

Although the ban has been delayed indefinitely (it was expected to come into force in October 2015 and then October 2016) and there is no indication of when it may come into force, companies should still begin to identify if they or any related companies (particularly within group structures) currently have corporate directors and consider who might replace any corporate directors, bearing in mind the statutory responsibilities and obligations that individual directors have.

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