Small Business, Enterprise and Employment Bill (HL Bill 91)

election, be required to be entered in the company’s PSC
register on its incorporation, and

(b) in the case of an election by the company itself—

(i) the person is a registrable person or a registrable
5relevant legal entity in relation to the company, and

(ii) the person’s particulars are stated in the company’s
PSC register.

(4) An election under this section is made by giving notice of election to
the registrar.

(5) 10If the notice is given by subscribers wishing to form a private
company—

(a) it must be given when the documents required to be
delivered under section 9 are delivered to the registrar, and

(b) it must be accompanied by a statement confirming that no
15objection was received as mentioned in subsection (2).

(6) If the notice is given by the company, it must be accompanied by—

(a) a statement confirming that no objection was received as
mentioned in subsection (2), and

(b) a statement containing all the information that is required to
20be contained in the company’s PSC register as at the date of
the notice in respect of matters that are current as at that date.

(7) The company must where necessary update the statement sent
under subsection (6)(b) to ensure that the final version delivered to
the registrar contains all the information that is required to be
25contained in the company’s PSC register as at the time immediately
before the election takes effect (see section 790X) in respect of matters
that are current as at that time.

(8) The obligation in subsection (7) to update the statement includes an
obligation to rectify it (where necessary) in consequence of the
30company’s PSC register being rectified (whether before or after the
election takes effect).

(9) If default is made in complying with subsection (7), an offence is
committed by—

(a) the company, and

(b) 35every officer of the company who is in default.

For this purpose a shadow director is treated as an officer of the
company.

(10) A person guilty of an offence under this section is liable on summary
conviction to a fine not exceeding level 3 on the standard scale and,
40for continued contravention, a daily default fine not exceeding one-
tenth of level 3 on the standard scale.

(11) A reference in this Chapter to matters that are current as at a given
date or time is a reference to—

(a) persons who are a registrable person or registrable relevant
45legal entity in relation to the company as at that date or time
and whose particulars are required to be contained in the
company’s PSC register as at that date or time, and

(b) any other matters that are current as at that date or time.

790X Effective date of election

(1) An election made under section 790W takes effect when the notice of
election is registered by the registrar.

(2) The election remains in force until either—

(a) 5the company ceases to be a private company, or

(b) a notice of withdrawal sent by the company under section
790ZC is registered by the registrar,

whichever occurs first.

790Y Effect of election on obligations under Chapter 3

(1) 10The effect of an election under section 790W on a company’s
obligations under Chapter 3 is as follows.

(2) The company’s obligation to maintain a PSC register does not apply
with respect to the period when the election is in force.

(3) This means that, during that period—

(a) 15the company must continue to keep a PSC register in
accordance with Chapter 3 (a “historic” register) containing
all the information that was required to be stated in that
register as at the time immediately before the election took
effect, but

(b) 20the company does not have to update that register to reflect
any changes that occur after that time.

(4) The provisions of Chapter 3 (including the rights to inspect or
require copies of the PSC register) continue to apply to the historic
register during the period when the election is in force.

(5) 25The company must place a note in its historic register—

(a) stating that an election under section 790W is in force,

(b) recording when that election took effect, and

(c) indicating that up-to-date information about people with
significant control over the company is available for public
30inspection on the central register.

(6) Subsections (12) and (13) of section 790M apply if a company makes
default in complying with subsection (5) as they apply if a company
makes default in complying with that section.

(7) The obligations under this section with respect to a historic register
35do not apply in a case where the election was made by subscribers
wishing to form a private company.

790Z Duty to notify registrar of changes

(1) The duty under subsection (2) applies during the period when an
election under section 790W is in force.

(2) 40The company must deliver to the registrar any information that the
company would during that period have been obliged under
Chapter 3 to enter in its PSC register, had the election not been in
force.

(3) The information must be delivered as soon as reasonably practicable
after the company becomes aware of it and, in any event, no later
than the time by which the company would have been required to
enter the information in its PSC register.

(4) 5If default is made in complying with this section, an offence is
committed by—

(a) the company, and

(b) every officer of the company who is in default.

For this purpose a shadow director is treated as an officer of the
10company.

(5) A person guilty of an offence under this section is liable on summary
conviction to a fine not exceeding level 3 on the standard scale and,
for continued contravention, a daily default fine not exceeding one-
tenth of level 3 on the standard scale.

790ZA 15 Information as to state of central register

(1) When a person inspects or requests a copy of material on the central
register relating to a company in respect of which an election under
section 790W is in force, the person may ask the company to confirm
that all information that the company is required to deliver to the
20registrar under this Chapter has been delivered.

(2) If a company fails to respond to a request under subsection (1), an
offence is committed by—

(a) the company, and

(b) every officer of the company who is in default.

(3) 25A person guilty of an offence under this section is liable on summary
conviction to a fine not exceeding level 3 on the standard scale.

790ZB Power of court to order company to remedy default or delay

(1) This section applies if—

(a) the name of a person is without sufficient cause included in,
30or omitted from, information that a company delivers to the
registrar under this Chapter concerning persons who are a
registrable person or a registrable relevant legal entity in
relation to the company, or

(b) default is made or unnecessary delay takes place in
35informing the registrar under this Chapter that a person—

(i) has become a registrable person or a registrable
relevant legal entity in relation to the company, or

(ii) has ceased to be a registrable person or a registrable
relevant legal entity in relation to it.

(2) 40The person aggrieved, or any other interested party, may apply to
the court for an order requiring the company to deliver to the
registrar the information (or statements) necessary to rectify the
position.

(3) The court may either refuse the application or may make the order
45and order the company to pay any damages sustained by any party
aggrieved.

(4) On such an application the court may decide—

(a) any question as to whether the name of any person who is a
party to the application should or should not be included in
or omitted from information delivered to the registrar under
5this Chapter about persons who are a registrable person or a
registrable relevant legal entity in relation to the company,
and

(b) any question necessary or expedient to be decided for
rectifying the position.

(5) 10Nothing in this section affects a person’s rights under section 1095 or
1096 (rectification of register on application to registrar or under
court order).

(6) The reference in this section to “any other interested party” is to—

(a) any member of the company, and

(b) 15any other person who is a registrable person or a registrable
relevant legal entity in relation to the company.

790ZC Withdrawing the election

(1) A company may withdraw an election made by or in respect of it
under section 790W.

(2) 20Withdrawal is achieved by giving notice of withdrawal to the
registrar.

(3) The withdrawal takes effect when the notice is registered by the
registrar.

(4) The effect of withdrawal is that the company’s obligation under
25Chapter 3 to maintain a PSC register applies from then on with
respect to the period going forward.

(5) This means that, when the withdrawal takes effect—

(a) the company must enter in its PSC register all the information
that is required to be contained in that register in respect of
30matters that are current as at that time,

(b) the company must also retain in its register all the
information that it was required under section 790Y(3)(a) to
keep in a historic register while the election was in force, but

(c) the company is not required to enter in its register
35information relating to the period when the election was in
force that is no longer current.

(6) The company must place a note in its PSC register—

(a) stating that the election under section 790W has been
withdrawn,

(b) 40recording when that withdrawal took effect, and

(c) indicating that information about people with significant
control over the company relating to the period when the
election was in force that is no longer current is available for
public inspection on the central register.

(7) 45Subsections (12) and (13) of section 790M apply if a company makes
default in complying with subsection (6) as they apply if a company
makes default in complying with that section.

790ZD Power to extend option to public companies

(1) The Secretary of State may by regulations amend this Act—

(a) to extend this Chapter (with or without modification) to
public companies or public companies of a class specified in
5the regulations, and

(b) to make such other amendments as the Secretary of State
thinks fit in consequence of that extension.

(2) Regulations under this section are subject to affirmative resolution
procedure.

CHAPTER 5 10Protection from disclosure

790ZE Protection of information as to usual residential address

(1) The provisions of sections 240 to 244 (directors’ residential
addresses: protection from disclosure) apply to information within
subsection (2) as to protected information within the meaning of
15those sections.

(2) The information within this subsection is—

(a) information as to the usual residential address of a person
with significant control over a company, and

(b) the information that such a person’s service address is his or
20her usual residential address.

(3) Subsection (1) does not apply to information relating to a person if an
application under regulations made under section 790ZF has been
granted with respect to that information and not been revoked.

790ZF Power to make regulations protecting material

(1) 25The Secretary of State may by regulations make provision requiring
the registrar and the company to refrain from using or disclosing
PSC particulars of a prescribed kind (or to refrain from doing so
except in prescribed circumstances) where an application is made to
the registrar requesting them to refrain from so doing.

(2) 30“PSC particulars” are particulars of a person with significant control
over the company—

(a) including a person who used to be such a person, but

(b) excluding any person in relation to which this Part has effect
by virtue of section 790C(12) as if the person were an
35individual.

(3) Regulations under this section may make provision as to—

(a) who may make an application,

(b) the grounds on which an application may be made,

(c) the information to be included in and documents to
40accompany an application,

(d) how an application is to be determined,

(e) where an application is granted, the duration of and
procedures for revoking the restrictions on use and
disclosure, and

(f) the charging of fees by the registrar for disclosing PSC
5particulars where the regulations permit disclosure, by way
of exception, in prescribed circumstances.

(4) Provision under subsection (3)(d) and (e) may in particular—

(a) confer a discretion on the registrar;

(b) provide for a question to be referred to a person other than
10the registrar for the purposes of determining the application
or revoking the restrictions.

(5) Regulations under this section are subject to affirmative resolution
procedure.

(6) Nothing in this section or in regulations made under it affects the use
15or disclosure of particulars of a person in any other capacity (for
example, the use or disclosure of particulars of a person in that
person’s capacity as a member or director of the company).”

2 After Schedule 1 to that Act insert—

Section 790C

“Schedule 1A References to people with significant control over a company

20Part 1 The specified conditions

Introduction

1 This Part of this Schedule specifies the conditions at least one of
which must be met by an individual (“X”) in relation to a company
25(“company Y”) in order for the individual to be a person with
“significant control” over the company.

Ownership of shares

2 The first condition is that X holds, directly or indirectly, more than
25% of the shares in company Y.

30Ownership of voting rights

3 The second condition is that X holds, directly or indirectly, more
than 25% of the voting rights in company Y.

Ownership of right to appoint or remove directors

4 The third condition is that X holds the right, directly or indirectly,
35to appoint or remove a majority of the board of directors of
company Y.

Significant influence or control

5 The fourth condition is that X has the right to exercise, or actually
exercises, significant influence or control over company Y.

Trusts, partnerships etc

6 5The fifth condition is that—

(a) the trustees of a trust or the members of a firm that, under
the law by which it is governed, is not a legal person meet
any of the other specified conditions (in their capacity as
such) in relation to company Y, or would do so if they were
10individuals, and

(b) X has the right to exercise, or actually exercises, significant
influence or control over the activities of that trust or firm.

Part 2 Holding an interest in a company etc

15Introduction

7 This Part of this Schedule specifies the circumstances in which, for
the purposes of section 790C(4) or (8)—

(a) a person (“V”) is to be regarded as holding an interest in a
company (“company W”);

(b) 20an interest held by V in company W is to be regarded as
held through a legal entity.

Holding an interest

8 (1) V holds an interest in company W if—

(a) V holds shares in company W, directly or indirectly,

(b) 25V holds, directly or indirectly, voting rights in company W,

(c) V holds, directly or indirectly, the right to appoint or
remove any member of the board of directors of company
W,

(d) V has the right to exercise, or actually exercises, significant
30influence or control over company W, or

(e) sub-paragraph (2) is satisfied.

(2) This sub-paragraph is satisfied where—

(a) the trustees of a trust or the members of a firm that, under
the law by which it is governed, is not a legal person hold
35an interest in company W in a way mentioned in sub-
paragraph (1)(a) to (d), and

(b) V has the right to exercise, or actually exercises, significant
influence or control over the activities of that trust or firm.

Interests held through a legal entity

9 (1) 40This paragraph applies where V—

(a) holds an interest in company W by virtue of indirectly
holding shares or a right, and

(b) does so by virtue of having a majority stake (see paragraph
18) in—

(i) 5a legal entity (“L”) which holds the shares or right
directly, or

(ii) a legal entity that is part of a chain of legal entities
such as is described in paragraph 18(1)(b) or (2)(b)
that includes L.

(2) 10Where this paragraph applies, V holds the interest in company
W—

(a) through L, and

(b) through each other legal entity in the chain mentioned in
sub-paragraph (1)(b)(ii).

15Part 3 Supplementary provision

Introduction

10 This Part sets out rules for the interpretation of this Schedule.

Joint interests

11 20If two or more persons each hold a share or right jointly, each of
them is treated for the purposes of this Schedule as holding that
share or right.

Joint arrangements

12 (1) If shares or rights held by a person and shares or rights held by
25another person are the subject of a joint arrangement between
those persons, each of them is treated for the purposes of this
Schedule as holding the combined shares or rights of both of them.

(2) A “joint arrangement” is an arrangement between the holders of
shares (or rights) that they will exercise all or substantially all the
30rights conferred by their respective shares (or rights) jointly in a
way that is pre-determined by the arrangement.

(3) “Arrangement” has the meaning given by paragraph 21.

Calculating shareholdings

13 (1) In relation to a legal entity that has a share capital, a reference to
35holding “more than 25% of the shares” in that entity is to holding
shares comprised in the issued share capital of that entity of a
nominal value exceeding (in aggregate) 25% of that share capital.

(2) In relation to a legal entity that does not have a share capital—

(a) a reference to holding shares in that entity is to holding a
40right to share in the capital or, as the case may be, profits of
that entity;

(b) a reference to holding “more than 25% of the shares” in that
entity is to holding a right or rights to share in more than
25% of the capital or, as the case may be, profits of that
entity.

5Voting rights

14 (1) A reference to the voting rights in a legal entity is to the rights
conferred on shareholders in respect of their shares (or, in the case
of an entity not having a share capital, on members) to vote at
general meetings of the entity on all or substantially all matters.

(2) 10In relation to a legal entity that does not have general meetings at
which matters are decided by the exercise of voting rights—

(a) a reference to exercising voting rights in the entity is to be
read as a reference to exercising rights in relation to the
entity that are equivalent to those of a person entitled to
15exercise voting rights in a company;

(b) a reference to exercising more than 25% of the voting rights
in the entity is to be read as a reference to exercising the
right under the constitution of the entity to block changes
to the overall policy of the entity or to the terms of its
20constitution.

15 In applying this Schedule, the voting rights in a legal entity are to
be reduced by any rights held by the entity itself.

Rights to appoint or remove members of the board

16 A reference to the right to appoint or remove a majority of the
25board of directors of a legal entity is to the right to appoint or
remove directors holding a majority of the voting rights at
meetings of the board on all or substantially all matters.

17 References to a board of directors, in the case of an entity that does
not have such a board, are to be read as references to the
30equivalent management body of that entity.

Shares or rights held “indirectly”

18 (1) A person holds a share “indirectly” if the person has a majority
stake in a legal entity and that entity—

(a) holds the share in question, or

(b) 35is part of a chain of legal entities—

(i) each of which (other than the last) has a majority
stake in the entity immediately below it in the
chain, and

(ii) the last of which holds the share.

(2) 40A person holds a right “indirectly” if the person has a majority
stake in a legal entity and that entity—

(a) holds that right, or

(b) is part of a chain of legal entities—

(i) each of which (other than the last) has a majority
stake in the entity immediately below it in the
chain, and

(ii) the last of which holds that right.

(3) 5For these purposes, A has a “majority stake” in B if—

(a) A holds a majority of the voting rights in B,

(b) A is a member of B and has the right to appoint or remove
a majority of the board of directors of B,

(c) A is a member of B and controls alone, pursuant to an
10agreement with other shareholders or members, a majority
of the voting rights in B, or

(d) A has the right to exercise, or actually exercises, dominant
influence or control over B.

(4) In the application of this paragraph to the right to appoint or
15remove a majority of the board of directors, a legal entity is to be
treated as having the right to appoint a director if—

(a) a person’s appointment as director follows necessarily
from that person’s appointment as director of the legal
entity, or

(b) 20the directorship is held by the legal entity itself.

Shares held by nominees

19 A share held by a person as nominee for another is to be treated
for the purposes of this Schedule as held by the other (and not by
the nominee).

25Rights treated as held by person who controls their exercise

20 (1) Where a person controls a right, the right is to be treated for the
purposes of this Schedule as held by that person (and not by the
person who in fact holds the right, unless that person also controls
it).

(2) 30A person “controls” a right if, by virtue of any arrangement
between that person and others, the right is exercisable only—

(a) by that person,

(b) in accordance with that person’s directions or instructions,
or

(c) 35with that person’s consent or concurrence.

21 (1) “Arrangement” includes—

(a) any scheme, agreement or understanding, whether or not
it is legally enforceable, and

(b) any convention, custom or practice of any kind.

(2) 40But something does not count as an arrangement unless there is at
least some degree of stability about it (whether by its nature or
terms, the time it has been in existence or otherwise).