Remaining compliant following the 4th Money Laundering Directive

Kelly Cosgrove

Since the fourth Money Laundering Directive (4MLD) came into force in June 2017, there has been some knock-on effects on the filing requirements for Limited Companies and LLPs.

You may remember that back in June 2016, the Annual Return was replaced by the Confirmation Statement and the Persons of Significant Control Register (PSC).  All companies were required to take reasonable steps to identify the company’s PSCs and create and maintain a register of these individuals or companies (Relevant Legal Entities).

The PSCs’ details were then to submitted along with the confirmation statement. Any changes to the company’s PSCs were to be notified once a year on filing of the confirmation statement unless the company had elected for Companies House to hold and maintain its register.

However, just as companies and their advisors were getting the hang of these new reporting measures, the 4MLD introduced more changes.

The most prominent change, and one that will affect most clients, is the reporting frequency of any changes made to PSCs.

This has reduced from being an annual requirement to being required within 28 days from the date of the change. Companies will have 14 days to update their register once notified of any changes and a further 14 days to notify Companies House of the change. This action has been taken to ensure that registers are kept up to date and are ‘current’ during the year rather than a ‘snapshot’ at one point in time.

The changes that need to be reported to Companies House via specific forms within 28 days include:

  • Change in nature of control (e.g. if the PSC acquires or sells shares)
  • Change to a PSC name or address
  • Change to the name of an RLE
  • If a PSC ceases to be a PSC

Companies House has recognised that the move to maintaining the PSC register has proved difficult for some, and the filing requirements may not have been fully understood or interpreted correctly by companies. As a result, Companies House plans to contact businesses whose PSC appears incorrect to help them comply. They will also be updating their PSC guidance and adding a ‘report it now’ button for those who experience problems when accessing information on the public register.

If you do require any assistance in preparing your Confirmation statement or Persons of Significant Control register or would like advice on how to update your details with Companies House, contact our Company Secretarial Department on 01254 688 100.

Annual Return to be rebranded as the Confirmation Statement

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Following our earlier update regarding Persons of Significant Control Register, we outline changes to company Annual Returns.

In January 2014 the governments announced its red tape challenge in which it set out to reduce the administrative burden placed on businesses, with the help of input from people in business, the general public and other organisations.

Currently all companies are required to file an annual return in which details of the companies officers, registered office address, shareholders  and share capital are reported to Companies House, this can prove frustrating as for many companies they are duplicating information already submitted to and held by Companies House.

When

From 30th June 2016 the annual return as we know it is to be abolished and replaced with the confirmation statement.

The confirmation statement is a declaration that since the last confirmation statement there have been no changes to the constitution of the company or that all changes have been reported at the time they took place. Therefore, the information that Companies House holds for the company is correct and up to date. If changes have taken place and Companies House has not been notified at the time, those details will need to be submitted along with the confirmation statement.

On the face of it, it appears there is little difference between the information a company currently submits under the annual return and what will be required under the confirmation statement, especially for those companies that already use Companies House online filing procedures for annual returns, in which they can progress through the details of the company and either confirm that no changes have taken place during the year or update the records accordingly.

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However, it is important to note three key differences as follows:

Filing Dates – Whilst annual returns had fixed filing dates, companies may make a confirmation statement at any time they wish, however no longer that 12 months may elapse between confirmation statements.

  • Reduced filing period – You were allowed a period of 28 days from the due date of the annual return to file it with Companies House. This period has been reduced down to 14 days for the confirmation statement, therefore if twelve months have elapsed since the last filing of the confirmation statement you will only have an additional 14 days to file the confirmation statement before the company is no longer considered to be in good standing.
  • Additional information – The introduction of the confirmation statement will coincide with the new Persons of Significant Control Register, and this will need to be delivered alongside the confirmation statement. For details on the Persons of significant control please click the link:

The current charge for filing an annual return is £40 using the paper filing method or £13 if filing online, no fee has yet been prescribed as payable on filing of the confirmation statement however this is likely to be included in the secondary legislation on the matter.

Persons of Significant Control Register

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What’s new?

Under new government legislation from 6 April 2016 each and every Limited company is required to maintain a register of Persons of Significant Control (PSC).

The PSC register is to be submitted on an annual basis to Companies House when submitting the Confirmation Statement and will be available to the general public for viewing or is to be made available on request from the public.

Whilst the register must be maintained from the 6 April 2016 the first time it will be submitted is after the 30 June 2016 when the Confirmation Statement is brought into effect.

What’s a Person of Significant Control?

The guidance from Companies House shows that for someone to qualify as a PSC one of the following conditions must be met:

  1. An individual who holds more than 25% of shares in the company.
  2. An individual who holds more than 25% of the voting rights in the company.
  3. An individual who holds the right to appoint or remove the majority of the board of directors.
  4. An individual who has the right to exercise, or actually exercises, significant influence or control over the company.
  5. A trust or firm which would satisfy conditions 1) to 4) were it an individual.

Conditions 1) to 3) can be met directly or indirectly. A condition is met indirectly where an individual holds their rights through another company or trust.

If any individual meets the above conditions then they need including on the PSC register.

What does the register look like?

The register can be a hand written register or it can be held electronically, i.e. an excel or word document, but it must contain the following information on each individual:

  • Name.
  • Date of birth.
  • Nationality.
  • Country, state or part of the UK where the individual usually lives.
  • Service address (this is in effect a correspondence address, we suggest using the companies registered office).
  • Usual residential address (this must not be disclosed when the register is made available for inspection and will not be disclosed by Companies House).
  • The date the individual became a PSC (default date should be 6 April 2016 if individual would have been a PSC before this date).
  • Which conditions are being met, i.e. i) to v)
    • If conditions i) or ii) are met then they must disclose which category they fall under; Over 25% up to 50%, More than 50% and less than 75%, 75% or more.
    • The register only needs to state if an individual meets condition iv) if they do not meet one of the conditions i) to iii).
  • Whether an application has been made for an individual’s information to be protected from public disclosure (this application can only be made if there is a threat of violence of intimidation).

What next?

The register must be kept up to date by the company.

The register must be submitted on an annual basis to Companies House along with the Confirmation Statement (the replacement to the Annual Return).