Gary Gray: Who owns what is a very good question

Recent events surrounding the personal finances of prominent UK politicians, and more so their investments in offshore structures, have resulted in a somewhat increased expectation of transparency of “who owns what” in the UK.

Whilst publicly available filings for UK registered companies and limited liability partnerships (LLPs) will, in the main, contain details of the owners of these organisations, in situations where these form part of wider, international structures, it can be difficult to identify ultimate beneficial owners and, in certain cases, who controls them.

This drive for transparency, which was originally heralded in 2013 by the then Secretary of State for Business Innovation and Skills, Vince Cable, in his Transparency and Trust paper, is expected to help in the fight against money laundering, while also increasing levels of trust in UK companies.

To do this, virtually all UK registered companies and LLPs must, with effect from 6 April 2016, prepare and maintain a register of People with Significant Control (PSC) Register – a requirement introduced by The Small Business, Enterprise and Employment Act 2015.

The PSC regime intends to enhance existing disclosure obligations - the register will capture those exercising such levels of control and record information about them which will, from 30 June 2016, be recorded in returns submitted to Companies House.

As companies and LLPs implement the requirements and prepare their PSC registers, it has become increasingly evident the PSC regime is not a “one size fits all”. The degree of investigation required of UK companies and LLPs will vary enormously, from those who will easily be in a position to record all relevant PSC details from the implementation date, through to those who will have to look beyond any shareholder that cannot automatically be categorised as either a PSC or relevant legal entity, to establish where any indirect significant control exists. The result may be many layers of investigation to establish whether a PSC exists and requires recording.

The PSC disclosure is, of course, a two-sided affair. It is not just the company or LLP which has an obligation to investigate and record details of any PSC. A person who considers that they satisfy any of the criteria set out by the legislation must advise the organisation of their position.

Both the company/LLP and any potential PSC may find themselves in breach of the legislation by failing to either investigate properly, or make the necessary disclosures to ensure the accuracy of the PSC register.

In situations where a potential PSC fails to provide the company/LLP with relevant information for inclusion in the PSC register, the company/LLP will have the ability to impose sanctions over any shares under the control of the potential PSC.

It is hoped that this ability to impose sanctions will encourage full disclosure and cooperation with the PSC regime. Ongoing failure to properly maintain the PSC register may also result in criminal sanctions against the company and its officers.

Members of the public will also be able to request copies of a PSC register directly from a company or LLP, on payment of a flat fee of £12. There will be appropriate steps to follow when making a request and it is important to ensure that any such request is for a proper purpose.

Alternatively, once the requirement to submit PSC information to Companies House is introduced, details of any recorded PSC will be available from the records at Companies House. It will be some time before the impact of the PSC regime can be measured, both in terms of the cost to firms in providing this data and also in terms of the benefit to corporate UK. What is clear is the expectation of greater transparency is unlikely to wither any time soon.

• Gary Gray is Head of Company Secretarial Services with Burness Paull LLP, and a Fellow of the Institute of Chartered Secretaries and Administrators