Charitable companies need to be aware that they must now complete a register of Persons with Significant Control (PSC) as this is a legal requirement from 6 April – with failure to undertake this being a criminal offence committed by the company and its controlling officers.
Introduced under the Small Business Enterprise and Employment Act 2015, the PSC register is designed to record which people own or control a company so as to provide greater public transparency. The register is also aimed at combatting the issue of shell companies in criminal enterprises.
On the face of it this may not sound particularly relevant to charitable companies, but whilst for many charities the filing requirements will be fairly straightforward; for others (for example those with subsidiary companies, where powers to appoint trustees are with a local authority or founder, or with four members or fewer) the obligations will be more extensive.
The register will also become an essential document to help inform banks and investors when they are considering investing in a company as well as supporting law enforcement agencies in money laundering investigations. It is likely that grant funders will also use it to understand relationships between a company charity and those connected with it.
Companies will also need to keep the register up-to-date whenever there is a change of significant control in the future.
Commenting on the issue, Gavin Poole, corporate partner at Stephens Scown, said: “This new requirement is part of the Government’s drive to raise transparency in business, to combat criminal activity and to underline the UK’s pre-eminence in clarity of corporate ownership. It means that companies will need to undertake quite a challenging review of their ownership and control structures. There are five criteria to determine ‘significant control’, which extend far beyond just share ownership; the criteria requires a review of governance documents and thinking about ways in which a controlling influence can be exerted.
At Stephens Scown, we have created a user friendly process to help answer these complex questions. We have drawn up template registers and can help companies or LLPs anywhere in England and Wales to prepare theirs easily.”