Do you own a UK company, a UK business, or property through a non-UK company? Are you aware of the legal obligations, including those which bring personal obligations for individuals who are the ultimate owners?
The existence of a UK company, whether it is owned by a direct shareholding or via a non-UK company (non-UK co), triggers legal obligations in the UK. Some are the responsibility of the UK company’s directors, but others look through a non-UK co and are the personal responsibility of the ultimate individual shareholders.
A UK company is required to create and maintain ‘statutory books’ comprising registers of members, directors, charges and now also a ‘PSC’ register (people with significant control). In addition the company needs to file an annual confirmation statement and accounts.
It is important to comply with these legal obligations. Failure to do so can be a criminal offence and can also have commercial ramifications. For example, if a potential sale, a new investor or simply raising more finance is on the agenda, statutory records will be checked during any due diligence work undertaken before a transaction can go ahead.
Since April 2016, un-listed UK companies must maintain a publicly available register of individuals who ultimately exercise, or have the right to significant influence or control over the company (a PSC). These rules also introduce new legal obligations for the individuals who are themselves a PSC.
Only an individual can be a PSC. Where a UK company is owned by a non-UK co, it must ‘look through’ its structure to identify any individual who ultimately is a PSC.
Each UK company must take ‘reasonable steps’ to identify its PSCs. There is no guidance on what actions the company must take as ’reasonable steps’, but failure to do so is a criminal offence for the company’s directors.
In turn, any individual who is a PSC is obliged to notify the company within a month of becoming a PSC (unless they have received a notice from the company). Failure to comply (including not responding to an information request) is a criminal offence. This can lead to a fine or imprisonment and a company may find itself obliged to disregard shareholder rights to vote or transfer shares or receive dividends if an incomplete response to its requests is received.
For further information about PSC's, including who is or may be a PSC see kpmg.com/uk/pscregister.
Even if there is not a UK company, trading, undertaking a business, regularly conducting business or just having a place of contact in the UK can all result in a UK business which is legally obliged to meet certain filing requirements in the UK.
For example, a non-UK co such as a Jersey company, undertaking a UK business would normally (depending on where the company is incorporated) be required to file a form of accounts with companies’ house.
There are proposals for a UK register recording the ultimate individual owners of non-UK co which own property in England and Wales. Non-compliance could result in civil and criminal sanctions and restrictions to the charging, sale and assertion of rights in relation to the property.
While superficially it might seem that a UK company, UK business or property, appear to be hidden if owned by a non-UK co, both the ultimate individual shareholders and any companies in the structure need to ensure they understand their legal obligations and do not allow them to be masked behind the structure.
For further information about KPMG Legal Services see kpmg.com/UK/legalservices.