In Short
- The PSC Register identifies individuals or entities that hold significant control or ownership (usually 25% or more) in a UK company.
- Maintaining an accurate PSC Register is mandatory and crucial for transparency, preventing financial crime, and meeting regulatory requirements.
- Non-compliance can result in severe penalties, including fines, criminal prosecution, reputational damage, and restricted access to banking and financial services.
Tips for Businesses
Ensure your company identifies all Persons with Significant Control accurately and keeps the PSC Register up to date. Regularly review ownership and control changes, and notify Companies House within 14 days of any updates. Treat PSC compliance as a key part of good governance to protect your business reputation and avoid costly penalties.
As of 2016, most companies registered in England need to comply with the Persons with Significant Control (PSC) regulations. The PSC regulations require companies to disclose who owns or controls the company. A Company must disclose to Companies House details of any person or parent entity that:
- holds 25% or more of the shares in the company;
- holds 25% or more of the voting rights in the company;
- holds 50% or more of the shares in the company;
- holds 50% or more of the voting rights in the company;
- holds 75% or more of the shares in the company;
- holds 75% or more of the voting rights in the company;
- has the right to directly or indirectly appoint or remove a majority of the board of directors of the company; and
- the person has the right to exercise, or actually exercises significant control over the company.
Companies House lists the details of these key persons or entities on the PSC Register, often referring to them as the ‘beneficial owners’.
This article explains PSC regulations that require companies to disclose key controllers and the importance of maintaining an accurate PSC register.
Why is the PSC Register Important?
The PSC Register was introduced to:
- increase transparency within corporate governance and ownership structures;
- prevent the use of complex corporate structures to hide illegal activities;
- support law enforcement and regulatory bodies in investigating financial crimes;
- help spot potential conflicts of interest; and
- makes it harder for criminals to use English companies for money laundering.
The PSC register is used to conduct business due diligence, allowing businesses to verify who they are dealing with, assess potential business partners or acquisition targets, and assist in compliance when undertaking Know Your Client (KYC) checks. Banks use the PSC register when opening business accounts, and lenders also utilise it when assessing business loan eligibility.
What Information is Kept on the PSC Register?
The PSC register contains the following details for each PSC:
- name;
- date of birth;
- nationality;
- country of residence;
- service address;
- usual residential address (protected from public disclosure);
- company number (if a legal entity);
- governing law (if a legal entity);
- legal form (if a legal entity);
- country of incorporation (if a legal entity);
- date when they became a PSC; and
- the nature of their control over the company.
How Can I Identify the PSCs in My Company?
To establish who the PSCs in your company are, you must look at the ownership structure. Any person or company that owns more than 25% of the shares in the company or holds more than 25% of the voting rights must be listed on the PSC register. You should also review the company’s articles of association and shareholder agreements to understand the rights each shareholder has. Some controlling shareholders and founders will have rights outlined in these documents that grant them significant control over the company, requiring them to be included in the PSC register.
How Do I Change the PSC Register?
When the balance of power in your company changes and a PSC crosses a PSC threshold (this is most applicable in relation to the share and voting right thresholds), you must notify Companies House within 14 days of the change of the PSC. You can make changes to the PSC register through your Companies House web filing account.
What Happens if I Do Not Comply With the PSC Regulations?
Under the current enforcement regime, companies face serious consequences for non-compliance. Failing to maintain an accurate PSC register can result in fines. More serious violations, such as deliberately filing false or misleading information, can lead to criminal prosecution of company officers, potentially resulting in imprisonment for up to two years and further fines.
Banks or defrauded parties who have been misled can cause companies to face commercial repercussions. This can impact a company’s reputation and cause it to be disqualified from accessing banking services, struggle to secure business loans, and may lead to litigation. Directors can also be disqualified or face criminal charges.
Key Takeaways
The UK’s approach to PSC regulation enforcement reflects its firm commitment to corporate transparency and the prevention of financial crime. The dual approach of significant penalties, including fines and potential imprisonment, alongside opportunities for companies to correct unintentional breaches, has proven effective in promoting compliance while maintaining business efficiency.
The impact of non-compliance extends far beyond immediate financial penalties. Companies face operational disruption, reputational damage, and difficulties accessing financial services. This reality has led most businesses to recognise that investment in PSC compliance systems is far more cost-effective than dealing with the consequences of violations.
Looking ahead, PSC enforcement is becoming increasingly sophisticated through technological advancement and greater international cooperation. The integration of PSC compliance with broader anti-money laundering frameworks suggests that requirements will continue to evolve, particularly in the financial services sector.
For companies operating in the UK, the message is clear: view PSC compliance not as a regulatory burden but as an essential part of good corporate governance. Those embracing this approach typically find they benefit from enhanced stakeholder trust and smoother business operations, while avoiding the substantial risks associated with non-compliance.
If you need help understanding PSC regulations, our experienced business lawyers can assist as part of our LegalVision membership. For a low monthly fee, you will have unlimited access to lawyers to answer your questions and draft and review your documents. Call us today on 0808 196 8584 or visit our membership page.
Frequently Asked Questions
The PSC Register lists the individuals or entities that control or own a company. It is crucial because it increases transparency, prevents financial crime, and helps banks, investors, and regulators verify who controls a business. All UK companies must keep their PSC details up to date.
If you fail to maintain an accurate PSC Register, you could face fines, criminal prosecution, or even imprisonment. Individual PSCs who ignore company notices may also be penalised. Non-compliance can damage your company’s reputation and restrict access to banking, finance, or other commercial services.
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