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The Criminal Effects of non-compliance with PSC Regulations

When regulations were brought in to force back in 2016 requiring businesses to identify and record details of the people with significant control (PSC) over the company, it was widely thought that the main targets for the enforcement of these regulations would be large businesses who were seeking to disguise who owns or controls UK companies.

The reality has been very different, with small independent businesses being the target of enforcement action from the Insolvency Service for failing to meet their legal obligations.

As a consequence, we are aware that many small independent operators businesses now find themselves the subject of criminal regulatory enforcement proceedings which can result in significant fines, or custodial sentences, being imposed on the business and directors.

Who is a PSC?

A PSC is an individual who meets one or more of the following criteria:

  • An individual who holds more than 25% of the shares of the company
  • An individual who holds more than 25 of the voting rights of the company
  • An individual who holds the right to appoint or remove the majority of board directors of the company

In addition the following

  • An individual who has the right to exercise or actually exercises significant influence or control over a company
  • Where a trust or firm would satisfy one of the first four conditions if an individual. Any individual holding the right to exercise or actually exercising significant influence or control over the activities of that trust or firm

What do I do if a PSC is identified?

As an officer of a company – director or secretary you MUST:

  • Identify the people with significant control (PSCs) over the company and confirm their information ;
  • Record the details of the PSC on the company’s own PSC register within 14 days;
  • Provide this information to Companies House within a further 14 days
  • Update the information on the company’s own PSC register when it changes within 14 days, and update the information at Companies House within a further 14 days
  • Confirm to Companies House that information on the public register is accurate, where it has not been updated in the previous 12 months.

What if there is no PSC?

The PSC register can never be blank.

In the event that no PSC is identified you are still required to notify Companies House of this, and to make any alterations to the register in the event that a PSC is subsequently identified.

What happens if I do not complete or update the PSC register?

It is a criminal offence not to:

  • Take reasonable steps to find out if there is anyone who is a PSC and identify them to Companies House
  • Give notice to the registrar of companies of an entry alteration or note in a company’s PSC register within 14 days of any change being made

The sanctions for such offences are a fine or possible imprisonment.

In the event that you do not comply with your PSC requirements Companies House will contact your business and give you an opportunity to rectify the position, before proceeding to enforcement action.

Should you require any advice or assistance in relation to fulfilling your PSC obligations, or should your business become the subject of regulatory enforcement proceedings, please contact Frankie Cooper or Ewen Macgregor.

The contents of this article are intended for general information purposes only and shall not be deemed to be, or constitute legal advice. We cannot accept responsibility for any loss as a result of acts or omissions taken in respect of this article.

Categories: Commercial | Licensing & Regulatory | Professional & Regulatory Services

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