The Corporate & Financial Weekly Digest edition of January 8 discussed draft guidance published by the UK Government’s Department for Business, Innovation and Skills (BIS) in December 2015 on the meaning of persons with “significant influence or control.” The draft guidance is in relation to new requirements for UK-incorporated companies and UK-formed limited liability partnerships (LLPs) to maintain a register of people with significant control (PSC Register).
By way of update, on January 25, draft statutory guidance for companies on the meaning of “significant influence or control” was presented to UK Parliament for approval. On January 27, the BIS also published draft statutory guidance for LLPs, which is to be presented to Parliament for approval on April 6.
Overall, both sets of statutory guidance reflect the drafts released in December 2015. The latest statutory guidance for both companies and LLPs expand the list of “excepted roles” that would not normally be considered as exercising “significant influence or control” (the roles were referred to as “safe harbours” in the December 2015 draft guidance). Tax advisors and investment managers are included in the non-exhaustive lists of roles that would not be considered to be exercising “significant influence or control.” The statutory guidance also confirms that where a person meets any of the first three “significant control” conditions in Schedule 1A of the Companies Act 2006, it is unnecessary to confirm whether that person has “significant influence or control.”
The conditions for companies include:
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the holding of more than 25 percent of the shares;
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the holding of more than 25 percent of the voting rights; or
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the right to appoint or remove the majority of the board of directors.
The conditions for LLPs include:
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the rights to more than 25 percent of the assets on a winding up;
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the holding of more than 25 percent of the voting rights; or
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the right to appoint or remove the majority of management.
The draft statutory guidance presented to Parliament with respect to companies, and the draft guidance in relation to LLPs, can be found here.
The December 2015 draft guidance released for companies can be found here, and for LLPs here.
