The Small Business, Enterprise and Employment Act 2015 (the 2015 Act) introduced a range of changes to company law in the UK. One of these changes, the introduction of a need for private limited companies in the UK to maintain a ‘Person of Significant Control’ Register (PSC Register), has particular relevance for those UK pension trustee board members that are corporate trustees.
What is a PSC Register?
Most corporate pension trustees will, as of 6 April 2016, be obliged to create and maintain a PSC Register. The PSC Register will hold information on the person(s) that hold ‘significant control’ over the corporate trustee. The 2015 Act deems individuals to have ‘significant control’ to be those who:
- Hold (directly or indirectly) 25% or more of the shares in the company; or
- Hold (directly or indirectly) 25% or more of the voting rights in the company; or
- Have the right (directly or indirectly) to appoint or remove directors with a majority of the voting rights of the board; or
- Have the rights to exercise, or actually exercise, significant influence or control over the company; or
- Have the right to exercise, or actually exercise, significant influence or control over the activities of a trust or firm, the trustees or partners of which satisfy one of the other conditions.
The situation remains the same where a corporate trustee is itself a subsidiary in a group of companies. It will need to examine its own ownership chain and identify either a PSC or a “registrable relevant legal entity” (RRLE). An RRLE is a company that meets any of the criteria listed above and is required to or exempt from maintaining its own PSC Register. Those organisations that are subsidiaries can take comfort from the fact that, when they identify an RRLE they needn’t delve any further into the corporate structure and can enter the entity details into the PSC Register. For example, if company A is wholly owned by company B (another non-exempt UK company), company A must enter company B on its PSC Register as an RRLE. Company A does not require to investigate whether there is a PSC who holds shares or control rights indirectly through company B. This minimises the burden on subsidiary companies and avoids duplication of the efforts involved in identifying PSCs.
When a corporate trustee has identified an individual that it believes to be a PSC, it must then provide that person or entity with a notice requesting that they confirm their status as a PSC and confirmation of various pieces of information including:
- Date of birth;
- Usual residential address;
- Clarification on which criteria they meet to be a PSC or RRLE; and
- The date when they became a PSC/ RRLE in relation to the trustee company.
On the other hand, where a RRLE is identified for a corporate trustee, the following information must be confirmed and entered into the PSC Register:
- Firm name;
- Registered office;
- Registration number (if any);
- Kind of legal entity; and
- Governing law.
Recipients of notices from trustee companies must respond within three months. Further anyone that knows that they are a PSC or RRLE for a trustee company, and does not receive such a notice must notify the trustee company of their particulars. Following confirmation of this information, the trustee company is then to enter this into the PSC Register and ensure that it is kept up to date, and available for public inspection without charge at its registered office.
Corporate trustees will also need to ensure that information contained in their PSC Register is included in their confirmation statement, which replaces the annual return from June 2016.
What happens if a PSC Register is not created/ maintained?
Corporate trustees, like all other companies, are under a legal obligation to maintain a PSC Register from 6 April 2016. Any failure to do so is a criminal offence, with both the trustee company and its officers being liable. If an individual is convicted for failure to maintain a PSC, they are vulnerable to either a period of imprisonment or a substantial fine.
What is to be done if a trustee company does not have a PSC or RRLE?
There may be situations where a corporate trustee does not have anyone that meets the criteria to be a PSC or RRLE. In those cases, the company is still obliged to maintain a register disclosing that there is no PSC or RRLE. Failure to do so will again result in a breach of the criminal law.
The introduction of the PSC regime represents a new development in the regulatory environment that corporate trustees must work within. It will require corporate trustees to be very clear on their ownership structure and, to regularly review this and ensure that it is accurately recorded in their PSC register. For the vast majority of corporate trustees their sponsoring employer’s secretarial function will be alive to this development, and will be able to provide support to ensure that their obligations under the 2015 Act are satisfied.
This Bulletin is for general information only and should not be relied upon as advice on your specific circumstances. If you wish to discuss any issues highlighted in this bulletin, please contact Andrew Holehouse, Louisa Knox or Edwin Mustard on +44 (0) 131 473 5385.