Some businesses will need to keep better records as a result of new legislation, says Kirsty Davey of the Corporate and Commercial team at Coodes Solicitors.
“With the current emphasis on corporate openness and transparency, the Small Business, Enterprise and Employment Act now requires every business to keep records of the people who control the company. Businesses operating through a company or limited liability partnership vehicle now need to record all of their ‘people with significant control’ (PSC) over the entity in their statutory registers. From 30th June they will also need to submit this information to Companies House, through the Confirmation Statement, which is replacing the Annual Return.
What is a PSC?
“A number of businesses will undoubtedly be unclear as to whether or not they have any PSCs and will need to ascertain this before they can create their records. PSCs are people who have a significant influence or control over the company or partnership. They are individuals who, either alone or jointly, meet one of a range of conditions, which include holding directly or indirectly, more than 25% of the company shares or voting rights or having the right to exercise significant influence or control over the company.
“We can guide you through how terms such as ‘significant influence or control’ will be interpreted, as it is not simply a case of meeting the 25% test and can include groups of people acting together, such as trustees.
What does this mean for my business?
“Although creating a record of these key people might sound simple we know that many businesses do not currently hold all of this information. In fact, when we work with many companies that are being bought or sold we often discover these records are lacking, it can delay a deal being completed.
“While major corporations will undoubtedly have up to date and accurate company books, the reality is that for many small businesses keeping records of company information is not a priority. This new legislation means that every business will now need to retain and file this information or risk facing criminal penalties.”
The official Government advice can be found here.
For advice on this legislation or to discuss any aspects of keeping company records please contact Kirsty Davey at Coodes Solicitors on 01326 318900 or email@example.com.