Catriona Reid of BTO Solicitors talks us through the implications of new “persons with significant control” rules introduced this summer to tackle tax avoidance, money laundering and other criminal activity through exploitation of Scottish Limited Partnerships.
Most UK companies and all UK limited liability partnerships must keep a register of “persons with significant control” (the PSC Register). The aim of the PSC Register is to ensure individuals with significant beneficial interest or other controlling powers in a company are easily identifiable.
As part of the UK government’s international commitment to improving transparency over who actually owns and controls UK companies, from 24 July 2017 this requirement has extended to eligible Scottish partnerships under the Scottish Partnerships (Register of People with Significant Control) Regulations 2017 (the “Regulations”) which were published on 26 June 2017.
Eligible Scottish Partnerships
The Regulations apply to “eligible Scottish partnerships” which include two forms of partnership:
- active Scottish limited partnerships; and
- Scottish Qualifying Partnerships, which are any general Scottish partnership where all the partners are corporate bodies, or whose partners are Scottish partnerships each of whose members is a limited company
Scottish general partnerships with at least one natural person as a partner do not fall within the persons with significant control regime.
Persons with Significant Control
An eligible Scottish Partnership can have more than one person with significant control. Under the Regulations a person with significant control is a person who meets one of the following criteria.
The first four are:
1. Ownership of the right to surplus assets on a winding up
- The person directly or indirectly holds the right to more than 25% of the surplus assets on winding up of the eligible Scottish partnership
2. Ownership of voting rights
- The person directly or indirectly holds more than 25% of the voting rights in the eligible Scottish partnership
3. Ownership of right to appoint or remove the persons entitled to manage the eligible Scottish partnership
- The person directly or indirectly holds the right to appoint or remove the majority of those entitled to take part in the management of the eligible Scottish partnership
4. Significant influence or control
- The person otherwise has the right to exercise, or actually exercising, significant influence or control over the eligible Scottish partnership
The fifth criteria relates to Trusts, partnerships etc where:
- The person has the right to exercise or actually exercises, significant influence or control over the activities of a trust and the trustees of the trust hold, directly or indirectly, any of the four rights set out above
- The person has the right to exercise or actually exercises, significant influence or control over the activities of a firm and the members of the firm hold, directly or indirectly, any of the four rights set out above
Any current and eligible Scottish Partnership must deliver details of any persons with significant control to Companies House by 7 August 2017. If there are no persons with significant control, that information must also be sent to the registrar by the deadline of 7 August 2017.
With effect from 24 July 2017 any new eligible Scottish Partnerships will have to detail those Persons of Significant Control at the time of incorporation of the partnership.
Thereafter there will be an obligation to tell Companies House about changes in the persons with significant control position within 14 days of any change taking place, and confirm annually that the details of those persons with significant control are correct.
The eligible Scottish partnership is responsible for gathering the information and the persons with significant control are obliged to provide it. If the obligations are not satisfied (e.g. failure to provide, or for deliberately providing false information), an offence, punishable by fine, is committed by both the partnership and the individuals themselves.