From 6th April 2016, almost all limited companies and limited liability partnerships must create a register that's on the public record identifying people with significant control over their business. From 6th April 2016, this register has to be created and held internally within your business and it must be kept up to date. From 30th June 2016, you must include what's on this register in your Annual Return (now renamed 'Annual Confirmation Statement') that you lodge each year with Companies House. The register must set out: the identity and mandatory additional details of people with 'significant' control over your business. 

'Significant control' can be met by one or more of the following conditions:

  • By an individual who holds, directly or indirectly, more than 25% of shares in the company.
  • By an individual who holds, directly or indirectly, more than 25% of voting rights in the company.
  • By an individual who holds, directly or indirectly, the right to appoint or remove the majority of the board of directors of the company.

A condition can also be met indirectly for example where an individual holds their rights through another company. Further information on indirect rights can be found in the detailed non statutory guidance provided on the government website. Here's the link: 

https://www.gov.uk/government/uploads/system/uploads/attachment_data/file/505303/NON-STATUTORY_GUIDANCE_FOR_COMPANIES_AND_LLPS.pdf

Significant control can also be met by the following less common conditions, which are separately explained in the governments' statutory guidance, here's the link:

https://www.gov.uk/government/uploads/system/uploads/attachment_data/file/510011/PSC_guidance_v1.pdf

  • By an individual who has the right to exercise, or actually exercises, significant influence or control over the company.
  • Where a trust or firm would satisfy one of the first four conditions if it were an individual.
  • By any individual holding the right to exercise, or who actually exercises, significant influence or control over the activities of that trust or firm. 

There are different rules where a company is owned or controlled by another entity, such as a parent company, instead of an individual. 

Not keeping this register (or not keeping it up to date) is treated as a criminal offence according to this new law. Fines and/or even up to 2 years in prison for non-compliant business controllers (such as directors, partners or shareholders), are threatened. So, if you don't who has significant control over your business you need to take all reasonable steps to find that out and record that, now!

Why has it been introduced? The objective is to increase transparency of company ownership and to assist enforcement agencies in conducting money laundering investigations.