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Failure to Comply with New Filing Rules Risks Fines or up to Two Years Imprisonment

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Business owners are advised to consider the implications of major new transparency rules being imposed on nearly all UK companies to combat tax evasion, money laundering and financing terrorism.

hlw Keeble Hawson logoThe Small Business, Enterprise and Employment Act 2015 - designed to boost trust and promote the UK as a sound business and investment destination - will clarify legal and beneficial ownership.

From January 2016, business owners have been obliged to file and keep an up to date register of all people and companies - PSCs - that have a ‘significant control’ over them. PSCs are defined as anyone who holds, directly or indirectly:

  • 25% (or more) shares
  • 25% (or more) voting rights
  • The right to appoint or remove a majority of the board of directors
  • The right to exercise significant influence or control over the company, or
  • The right to exercise significant influence or control over a trust or firm which meets one or more of the above.

The register has required compulsory filing at Companies House from April 2016.

The legislation could hit some firms badly - for example where PSCs have notoriety or if they work with other, controversial enterprises and customers shun them as a result.

Company officers must take all reasonable steps to pursue PSCs or risk fines or up to two years’ imprisonment and they can impose heavy sanctions against anyone who does not cooperate. Businesses are responsible for collating and compiling a register as well as maintaining and updating records as changes occur.

Rory Conwill, a solicitor in the Corporate Department of hlw Keeble Hawson, said: “The true impact of the PSC Register remains to be seen - and many companies will be affected in different ways. Businesses need to find out precisely what their obligations are along with their powers of enforcement - and how they are demonstrating that they are complying with the new rules.”

The new rules apply to all companies formed and registered under the UK Companies Acts, except those subject to the disclosure requirements of the DTR 5 (e.g. London Stock Exchange and AIM companies).

For more information contact Rory Conwill on 0114 252 1411 or email roryconwill@hlwkeeblehawson.co.uk.

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