How Shelf Companies Lost Their Appeal and What to Do Now
Also known as a ready-made company or an off-the-shelf company, a shelf company is a pre-registered business you can buy and customise.
As a company owner or director, it is important to keep up with new legislation and changes of requirements for registered companies. A new requirement for a register of people with significant control, or PSC register, came into effect on 6th April 2016.
This new requirement means that all UK registered companies and LLPs must put together and maintain a register of people within the company who have significant influence and control. This new register effectively replaces what was know as the annual return. Any company scheduled to submit their annual return after the 30th June 2016, would have to submit a PSC register instead. All newly formed companies will have to submit a PSC register.
What is in the PSC register?
The PSC register is used to record and maintain details about the individuals within the company with overall ownership and control or great influence over the activities of the business. It is now a statutory requirement that applies to all private companies and LLPs.
It may be that the people within your company who have significant control are not always the same people that are registered on your list of members. You could have PSCs that may or may not be guarantors or shareholders, or even LLP members.
The government is working to increase corporate transparency and trust in the UK, so the PSC register is a big part of this move and by disclosing this information on the pubic register it goes towards improving transparency. These efforts will also help to reduce tax evasion and prevent money laundering activities by making it perfectly clear who owns and controls registered UK companies.
Who is responsible for keeping a PSC register?
A PSC register should be created and maintained by the following list of registered companies:
- Limited liability partnerships
- Private companies limited by guarantee
- Private companies limited by shares
- Societas Europaea (SEs)
Who would you class as a person with significant control?
A person with significant control can be an actual person within your company, but can also be a legal entity, such as another corporate body. An individual should go onto the PSC register if they meet at least one of the following criteria:
- Owns more than 25% of shares in a private company limited by shares
- Holds more than 25% of the voting rights in the company
- Has the right to appoint or remove a majority of the directors
- Exercises, or has the right to exercise, significant influence or control over the business
- Exercises, or has the right to exercise, significant influence or control over the activities of a trust or firm which is not a legal entity, but would itself satisfy one of the first four conditions if it were an individual
The first three conditions could be met directly as an individual person, or met indirectly through a separate company that holds shares.
For small companies and partnerships where there are very few people involved in running the company, it can be very straightforward to list all the people with significant control onto the PSC register. It may be that all the partners and directors have equal and significant control. However, this is not so clear cut for much larger companies who may have numerous stakeholders with significant control.
Luckily, Companies House have provided some official guidelines that you can access. These guidelines spell out your PSC requirements and are very helpful for companies with more complex structures and ownership control.
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What information is needed for the PSC register?
It is the responsibility of the designated LLP members or company officers to gather together information on all people with significant control within their company. All the details they collect should be confirmed as accurate by the individual PSCs before being entered onto the PSC register. Once compiled, the register should then be lodged with Companies House for their records.
With regard to individual human PSCs, the following information needs to be collected for the register:
- Full name
- Date of birth
- Service address
- Usual residential address (unless also provided as the service address)
- Nationality
- Country in which the PSC resides
- Date he or she became a PSC of the company or LLP
- Qualifying condition(s) met for entry in the PSC register, including quantification of control
- over 25% up to 50%
- more than 50% and less than 75%
- 75% or more
When another company is a PSC (i.e. a non-human), you will have to gather together and confirm the following required information for the PSC register:
- Registered name in full
- Registered or principal office
- Legal form of the PSC and the law it is governed by
- Registered number
- Company register in which the legal entity appears
- Date it became a PSC of the company or LLP
- Qualifying condition(s) met for entry in the PSC register, including quantification of its control
Delivering the PSC register to Companies House
As of the 30th June 2016, all existing registered companies and LLPs must include their PSC register in their first confirmation statement. The annual return was replaced by the confirmation statement on June 30th 2016. The PSC register should be confirmed as still being an accurate record, or updated with details of any new additional PSCs, annually on each subsequent confirmation statement.
All registered companies and LLPs formed on or after June 30th 2016 need to provide their PSC register as part of their incorporation. As with all existing registered companies, new companies will need to confirm the details of their PSC register or update them with each yearly confirmation statement submission.
Public disclosure of PSC register
Details of your PSC register is held on pubic record at Companies House. This means that any member of the public is free to inspect the central register online via the Companies House website. As well as having your PSC register lodged on the public register, you must also keep a copy at your registered office or SAIL address (Single Alternative Inspection Location) that is open to public view.
Although you have submitted quite detailed and sometimes personal information about your PSCs into your register, Companies House will withhold some elements from public view, such as the date of birth of your PSCs for data protection reasons. Your own copy of the register held at your registered office should not disclose your PSCs residential addresses, unless they have nominated their home address as being their registered service address.
Updating your company PSC register
There will be times when you may need to update the details held within your PSC register. This will happen should a PSC pass away or sell their shares and no longer be involved in the company, or a shareholder increases their shares significantly, or when you have new PSCs to add to the register etc. such as when appointing a new company director for example.
In these circumstances, the information needs to be updated immediately in your PSC register, but you do not need to notify Companies House of any changes until your next confirmation statement. However, you may file an early confirmation statement to Companies House should you want to have the public register updated immediately. This could be at the request of the PSC themselves, or because you decide to do this because your next confirmation statement isn’t due for many months. You can find out how to change your PSC register details here.
