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Changes to PSC legislation – are you prepared?

Kirsty McAuley of Coodes Solicitors outlines new legislation relating to ‘people with significant control’ (PSCs) and why it means businesses will need to keep more detailed records in future.


With the current emphasis on corporate openness
and transparency, the Small Business, Enterprise and Employment Act now
requires every business to keep records of the people who control the company.
Businesses operating through a company or limited liability partnership vehicle
now need to record all of their ‘people with significant control’ (PSC) over
the entity in their statutory registers. From 30th June they will also
need to submit this information to Companies House, through the Confirmation Statement,
which is replacing the Annual Return.

 

What is
a PSC?

 

A number of businesses will undoubtedly be
unclear as to whether or not they have any PSCs and will need to ascertain this
before they can create their records. PSCs are people who have a significant
influence or control over the company or partnership. They are individuals who,
either alone or jointly, meet one of a range of conditions, which include
holding directly or indirectly, more than 25% of the company shares or voting
rights or having the right to exercise significant influence or control over
the company.

 

We can guide you through how terms such as
‘significant influence or control’ will be interpreted, as it is not simply a
case of meeting the 25% test and can include groups of people acting together,
such as trustees.

 

What
does this mean for my business?

 

Although creating a record of these key people
might sound simple we know that many businesses do not currently hold all of
this information. In fact, when we work with many companies that are being
bought or sold we often discover these records are lacking, it can delay a deal
being completed.

 

While major corporations will undoubtedly have
up to date and accurate company books, the reality is that for many small
businesses keeping records of company information is not a priority. This new
legislation means that every business will now need to retain and file this
information or risk facing criminal penalties.

 

The official Government advice can be found here.


Blog supplied by Kirsty McAuley at Coodes Solicitors. For advice on this legislation or to discuss any aspects of keeping company records please contact Kirsty on 01326 318900 or kirsty.mcauley@coodes.co.uk.

www.coodes.co.uk

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