As you are aware, in 2016 the UK introduced the PSC regime, also known as the Register of People with Significant Control. Since then, UK companies have been required to provide Companies House with details of any PSCs and their nature of control(s).
In January 2020, the 5th Anti Money Laundering Regulations also introduced legislation that require obliged entities (including Banks, other financial institutions etc.) to carry out checks when onboarding customers and to report any discrepancies in PSC data to Companies House.
Unfortunately, we are seeing a high number of administrative errors by companies on incorporation, resulting in conflicting PSC information being provided within the initial incorporation document. As a result of this administrative error, we are receiving high numbers of discrepancy reports which Companies House must investigate. This could be causing delays in the transaction/event occurring between the company and the obliged entity, whilst they report the discrepancy to Companies House, and then Companies House contacts the company asking them, where necessary, to update the Register.
These are the two most common scenarios we are seeing:
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The prescribed particulars attached to the shares state that the shares have voting rights, yet the PSC information supplied on incorporation states the only nature of control is the ownership of shares, voting rights should also be shown as a nature of control.
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The PSC supplied at incorporation holds a significant number of shares and voting rights, yet the nature of controls supplied for that PSC do not reference the ownership or voting rights of shares. They state that the PSC has influence and control over the company, which suggests the PSC has influence or control in some other way. In this scenario the nature of control is through shares and voting rights.
For example, where there is only one shareholder, the information entered for the PSC is likely to be that of the shareholder and the shares and voting rights provided should mirror the percentage of shares held and the voting rights attached to those shares.
Our analysis shows a significant amount of these administrative errors are coming from companies incorporated by 3rd party agents, and with some guidance or alterations to your service we think they could be avoided. This would not only speed up the transactions/events occurring between the company and the obliged entity, but it would also reduce the amount of administrative work for the company involved in correcting the register.
As you have probably worked out already, there is also an increased workload on the obliged entities and Companies House, dealing with discrepancies that could be avoided. As a result, we may need to explore adding additional validation to the xml gateway to avoid these errors from occurring, which may result in an increase in rejections if customers are not supplying the correct data 1st time.
we will issue further communications on this issue in due course and in the meantime would be interested in any comments you may have regarding the above.
SDN