Since 6 April 2016, most UK incorporated businesses must maintain a register of people that have significant control over them. Failure to comply will be a criminal offence. I interviewed David Judah, head of corporate and fellow partner at Wallace LLP to get more info.

Frank Jennings: David, can you summarise what this means?

David Judah: Incorporated businesses (with exceptions for most companies that are listed on a regulated exchange) must maintain a register of those people or entities which ultimately own or control more than 25% of the company’s shares (or >25% of an LLP’s assets), more than 25% of the company/LLP’s voting rights, or who otherwise exercise control over the company or LLP and its management.

FJ: Why is this happening?

DJ: The Persons of Significant Control (PSC) register is a key part of the UK Government’s G8 commitment for better transparency of corporate entities. The EU is taking similar steps as part of the new Money Laundering Directive. Often the person who controls a business is not the same as those shown on the shareholders or members register.

FJ: How does this affect cloud companies?

DJ: This new requirement extends to most companies limited by shares or guarantee, unlimited companies, limited liability partnerships (LLPs) and Societaes Europeas (SEs). If they are US entities, they must comply with US law as before, but their UK subsidiaries will be caught.

FJ: What happens if they don’t comply?

There are criminal penalties for companies and their officers for non-compliance.

FJ: What must people do? 

DJ: If they haven’t done so already, companies must take reasonable steps to identify their PSCs immediately and put together a publicly accessible PSC register. Readers can email me for our more information.