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PSCs and RLEs (Persons with Significant Control and 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.

 

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 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 (PSE) or a Relevant Legal Entity (RLE)?  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 (PSE) or Relevant Legal Entity (RLE) reasons?  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 (PSE) or a Relevant Legal Entity (RLE)? 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.

The system cannot detect any change in the more abstract reasons – as they are based on information that is not stored in Kudocs.
Even if the ‘mathematical’ test flags something, that does not necessarily mean that the PSC/RLE reasons need to be updated:  the statements Kudocs can check for are about directly or indirectly holding x% of the shares/ voting rights, but the ‘mathematical’ tests Kudocs can check for only test for direct holdings.

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.

 

Does Kudocs handle PSC08 and PSC09 statements?  Yes, you can use Kudocs to manages any PSC08 or PSC09 statements – both in the company registers and the corresponding filings at Companies House.

 

What are PSC08 and PSC09 statements?  A company is required by law to determine which individuals (PSC) or relevant legal entities (RLE) have significant control over it. The company must record this in their company registers and inform Companies House.  See above for more information.

In addition, a company is also required to add certain statements to its registers and notify Companies House if it:

  • does not have a PSC/RLE (ie positive confirmation that the PSC/RLE register does not contain any names);
  • has a PSC/RLE but is still in the process of determining who the PSC/RLE is or their details; or
  • has a PSC/RLE and has issued a notice to the PSC/RLE (or suspected PSC/RLE) asking them to provide information to enable the company to comply with its obligations.

These are known as PSC08 statements.

When these statements cease to be correct, the company has to add another statement to the registers and notify Companies House of the change.  These are known as PSC09 statements.

This means that if the company has a PSC08 statement that it has no PSC/RLE, but then something changes which means it does now have a PSC/ RLE, it is not enough just to add the PSC/RLE to the register.  The company first has to add the PSC09 statement and file that at Companies House (to say that the PSC08 statement is no longer correct) and then add the PSC to the register and file that at Companies House.  In fact, if you try to file details about a new PSC/RLE when you have a PSC08 in place, Companies House will reject the filing.  It’s all quite long winded and complex, but don’t worry:  It’s all very easy and quick to do in Kudoc (much easier than reading all of this!

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