Businesses need to prepare for changes to Company Law
Business owners are encouraged to prepare for a change to company legislation that will require them to register individuals with 'significant control' over the company.
Under proposals, laid down in the Small Business, Enterprise and Employment Act 2015, all businesses that are not subject to specified separate disclosure requirements must create and maintain a register containing details of any person with 'significant control'.
A person with significant control is loosely defined as a person who directly or indirectly holds more than 25 per cent of the shares or voting rights in the company.
It also includes any person who directly or indirectly has the power to appoint or remove the majority of the board of directors of the company or otherwise has the right to exercise or actually exercises ‘significant influence’ or ‘control’ over the company.
Any person who has the right to exercise or actually exercises 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 new 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.
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 replaces the traditional annual return.
This is an additional legislative burden on businesses, but they need to understand that this new law imposes proactive obligations both on companies and on persons with significant control.
Failure to complete a PSC Register and file it with Companies House could mean that the business and its directors face criminal liability. Additionally, the company can freeze the interest of any individual whom the company has identified as being eligible to be placed on the PSC register until they comply. Dividends, voting and other rights could be affected while the interest is frozen.
Businesses should act now and seek professional advice if they are unsure of their responsibilities under the new legislation.
For more details please contact Stuart Hinnigan at the office.
Author: Stuart Hinnigan FCA CTA
Stuart’s career in accountancy began when he joined Preston based Moore and Smalley in 1994 following his graduation from Lancaster University. He qualified as a Chartered Accountant in 1997 and then chose to specialise in...
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