PSCs & RLEs (Persons with Significant Control & Relevant Legal Entities)
What is a PSC or RLE? A PSC is a Person with Significant Control over a company. The clue is in the name – its all about having actual and significant control over the company. An RLE is a Relevant Legal Entity – the same as a PSC, but applies when the control is held by a corporate entity (e.g. another company).
Why do I need to worry about PSCs and RLEs? The PSC/RLE concept was introduced in 2016 to enhance the transparency of ultimate (beneficial) ownership and control of UK companies. Companies are required not only to keep records of who legally has control over the company (e.g. directors, shareholders and members), but who actually has control. E.g. you have nominee shareholders, but the owners behind the nominees are the ones in actual control. The PSC/RLE scheme, and the obligation to keep a PSC/RLE register, are intended to promote good corporate behaviour and to deter illicit activity.
Every UK company needs to have a PSC register, even if the company does not have any PSC/RLE (in which case there are separate obligations).
What qualifies a person or entity as a PSC or RLE? The whole purpose of the scheme is to put the responsibility on the company. It needs to check the various conditions set out in law which define what makes someone a PSC or a corporate entity an RLE and then analyse its ownership (legal and actual/beneficial) and control to see if any conditions are met.
Some of the conditions are relatively straightforward and mathematical (e.g, owning a certain % of shares), but others are more abstract and require a careful assessment of the facts and conditions.
If the conditions are met, the company needs to add their details to its PSC/RLE register and notify Companies House. There are strict time limits within which a company must update its register and notify Companies House.
Can I use a third party to complete this assessment? Yes – a company may choose to take legal advice when completing this assessment.
What happens if the company does not maintain accurate registers? Both the company and its officers (directors and secretary, if any) may risk of fines and imprisonment. In certain situations, a company may not have enough information to identify PSCs or RLEs. In such cases, companies can send out requests for information. Persons failing to comply with such requests may be committing a criminal offence and are liable to have further steps taken against them if they continue not to comply). Individual PSCs are also under a positive obligation to notify companies of their status and any changes.
Does Kudocs maintain and automate PSC/RLE registers and Companies House filings? Yes. It is very easy to maintain and update PSC/RLE registers on Kudocs. The system will explain all the information that is needed so that the registers are accurate, and it will automatically update Companies House for you when you make a change. The system will also validate the reasons you enter to ensure they are compliant (as certain reasons preclude other reasons from being applicable). Kudocs does not, however, tell you what PSC/RLE reasons apply. That assessment has to be done by the company.
How do I add a Person with Significant Control (PSC) or a Relevant Legal Entity (RLE)? Check out the guide here. (But in summary: This is very easy. Just go to the Actions list and select “Add PSC/RLE”. Complete the process, using the helpful guidance provided by Kudocs, and then save. The information will be stored in Kudocs – including updating the stakeholder’s details and the PSC/RLE register – and any necessary filings will be submitted to Companies House.
How do I edit Person with Significant Control (PSC) or Relevant Legal Entity (RLE) reasons? Check out the guide here. (But in summary: Select the relevant PSE or RLE whose reasons you want to edit. Click the quick action list and select edit details. In the PSC/RLE details section, add or remove the reason(s) providing the date each reason started/ ceased to be applicable. The stakeholder’s page and registers will be updated and Companies House filing(s) will be submitted. It’s all taken care of.)
How do I remove a Person with Significant Control (PSC) or a Relevant Legal Entity (RLE)? Check out the guide here. (But in summary: Select the relevant PSE or RLE whose reasons you want to edit. Click the quick action list and select edit details. In the PSC/RLE details section, remove the reason(s) providing the date each reason ceased to be applicable. When there are no longer any reasons, the PSC/ RLE will be removed. The stakeholder’s page and registers will be updated and Companies House filing(s) will be submitted. It’s all taken care of.
Does Kudocs flag when a PSC/RLE update may be needed? Yes. After certain transactions are completed in Kudocs, the system automatically runs some ‘mathematical’ checks: the current PSC/RLE reasons that relate to shareholdings and voting rights against the actual shareholdings and voting rights. If the reasons in the system do not match the reasons the checks identity, you will receive an email notifying you that there might be a discrepancy that you need to check.
The PSC/RLE regime is intended to put the burden on the company to assess its substantive situation and declare all relevant reasons (mathematical and abstract). Therefore, we only flag that we think there might have been a change that needs updating, we leave the assessment to the company.
E.g. a shareholder directly holds 42% of the voting rights. But they have 10% more voting rights via indirect holdings (e.g. via another shareholder), which when combined, qualifies the shareholder for the 50-75% reason, not the 25-50% reason. Kudocs does not know about the indirect holding – again a reason to get the company to make its own assessment.
What happens if there are no PSCs or RLEs? You may need to file a PSC08 to notify Companies House. See here for more info.