Thousands of businesses, directors and, potentially, even retired business leaders could face criminal prosecution if they don’t comply with the new ‘person with significant control’ (PSC) regulations lawyers at Maclay Murray & Spens have warned.

The PSC Register was introduced by the Small Business Enterprise and Employment Act 2015 and is underpinned by a stringent criminal liability regime. The date for its introduction will be 6th April 2016 and statutory guidelines have only recently been issued.

Derek McCombe, a corporate partner with UK-wide commercial law firm Maclay Murray & Spens LLP, said: “Although the premise of the new PSC Register appears relatively straightforward, the latest guidance shows it is far-reaching and complex in order to close down potential loopholes and achieve its stated aims.”

“The meaning of the term ‘significant influence or control’ is explained in statutory guidance and is wide-ranging. Even business leaders who have perhaps retired or taken a back seat in a family business, were the board of directors still to follow their instructions, could be caught by the new regulations.”

“Crucially, the obligation is not only on companies and LLPs but also on individuals who are PSCs to “put their hands up” and be placed on the register, otherwise they potentially face criminal sanctions. The penalties that can be applied for non-compliance include fines and/or imprisonment, and apply to companies, limited liability partnerships (LLPs) and PSCs.”

The new rules apply to all non-listed UK companies and LLPs, which from 6th April must have in place a publicly available PSC Register. From 30th June, PSC information must also be filed at Companies House annually when a company or LLP next completes its confirmation statement (formerly annual return).

A person must be included on the PSC Register if they have direct or indirect ownership/control of more than 25% of a company’s shares or voting rights; has the right to appoint or remove a majority of the board of directors; or can exercise significant influence or control over the company. Anyone who has significant influence or control over the activities of a trust or firm, which itself would meet any of the first three conditions if it were an individual, is also obliged to be named.

Mr McCombe concluded: “Companies, LLPs and PSCs should act now to ensure compliance as doing nothing at this stage is not an option. A PSC register must be in place by 6 April 2016.”

Derek McCombe