Small Business, Enterprise and Employment Bill (HL Bill 103)

(3) 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.

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

(1) This section applies if—

(a) 5the name of a person is without sufficient cause included in,
or 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) 10default is made or unnecessary delay takes place in
informing 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
15relevant legal entity in relation to it.

(2) The 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) 20The court may either refuse the application or may make the order
and 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
25party to the application should or should not be included in
or omitted from information delivered to the registrar under
this Chapter about persons who are a registrable person or a
registrable relevant legal entity in relation to the company,
and

(b) 30any question necessary or expedient to be decided for
rectifying the position.

(5) Nothing 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) 35The reference in this section to “any other interested party” is to—

(a) any member of the company, and

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

790ZD Withdrawing the election

(1) 40A company may withdraw an election made by or in respect of it
under section 790X.

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

(3) The withdrawal takes effect when the notice is registered by the
45registrar.

(4) The effect of withdrawal is that the company’s obligation under
Chapter 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) 5the company must enter in its PSC register all the information
that is required to be contained in that register in respect of
matters 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 790Z(3)(a) to
10keep in a historic register while the election was in force, but

(c) the company is not required to enter in its register
information 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) 15stating that the election under section 790X has been
withdrawn,

(b) recording when that withdrawal took effect, and

(c) indicating that information about people with significant
control over the company relating to the period when the
20election was in force that is no longer current is available for
public inspection on the central register.

(7) Subsections (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.

790ZE 25 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
the regulations, and

(b) 30to 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 Protection from disclosure

790ZF 35 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
those sections.

(2) 40The 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
her usual residential address.

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

790ZG Power to make regulations protecting material

(1) 5The 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) 10“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
15individual.

(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
20accompany an application,

(d) how an application is to be determined,

(e) the duration of and procedures for revoking the restrictions
on use and disclosure,

(f) the operation of sections 790N to 790S in cases where an
25application is made, and

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

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

(a) 30confer a discretion on the registrar;

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

(5) Regulations under this section are subject to affirmative resolution
35procedure.

(6) Nothing in this section or in regulations made under it affects the use
or 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

Part 1 The specified conditions

5Introduction

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
(“company Y”) in order for the individual to be a person with
“significant control” over the company.

10Ownership of shares

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

Ownership of voting rights

3 The second condition is that X holds, directly or indirectly, more
15than 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,
to appoint or remove a majority of the board of directors of
company Y.

20Significant 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 The fifth condition is that—

(a) 25the 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
individuals, and

(b) 30X 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

Introduction

7 This Part of this Schedule specifies the circumstances in which, for
5the 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) an interest held by V in company W is to be regarded as
held through a legal entity.

10Holding an interest

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

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

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

(c) V holds, directly or indirectly, the right to appoint or
15remove any member of the board of directors of company
W,

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

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

(2) 20This 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
an interest in company W in a way mentioned in sub-
paragraph (1)(a) to (d), and

(b) 25V 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) This paragraph applies where V—

(a) holds an interest in company W by virtue of indirectly
30holding shares or a right, and

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

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

(ii) 35a 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) Where this paragraph applies, V holds the interest in company
W—

(a) 40through L, and

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

Part 3 Supplementary provision

Introduction

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

5Joint interests

11 If 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) 10If shares or rights held by a person and shares or rights held by
another 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
15shares (or rights) that they will exercise all or substantially all the
rights 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) 20In relation to a legal entity that has a share capital, a reference to
holding “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) 25a reference to holding shares in that entity is to holding a
right 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
3025% of the capital or, as the case may be, profits of that
entity.

Voting 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
35of an entity not having a share capital, on members) to vote at
general meetings of the entity on all or substantially all matters.

(2) In 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
40read as a reference to exercising rights in relation to the

entity that are equivalent to those of a person entitled to
exercise 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
5right under the constitution of the entity to block changes
to the overall policy of the entity or to the terms of its
constitution.

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

10Rights to appoint or remove members of the board

16 A reference to the right to appoint or remove a majority of the
board 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 15References 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
equivalent management body of that entity.

Shares or rights held “indirectly”

18 (1) A person holds a share “indirectly” if the person has a majority
20stake in a legal entity and that entity—

(a) holds the share in question, 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
25chain, and

(ii) the last of which holds the share.

(2) A 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) 30is 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) 35For 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
40agreement 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
45remove 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) the directorship is held by the legal entity itself.

5Shares 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).

Rights treated as held by person who controls their exercise

20 (1) 10Where 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) A person “controls” a right if, by virtue of any arrangement
15between 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) with that person’s consent or concurrence.

21 (1) 20“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) But something does not count as an arrangement unless there is at
25least some degree of stability about it (whether by its nature or
terms, the time it has been in existence or otherwise).

Rights exercisable only in certain circumstances etc

22 (1) Rights that are exercisable only in certain circumstances are to be
taken into account only—

(a) 30when the circumstances have arisen, and for so long as
they continue to obtain, or

(b) when the circumstances are within the control of the
person having the rights.

(2) But rights that are exercisable by an administrator or by creditors
35while a legal entity is in relevant insolvency proceedings are not to
be taken into account even while the entity is in those proceedings.

(3) “Relevant insolvency proceedings” means—

(a) administration within the meaning of the Insolvency Act
1986,

(b) 40administration within the meaning of the Insolvency
(Northern Ireland) Order 1989, or

(c) proceedings under the insolvency law of another country
or territory during which an entity’s assets and affairs are

subject to the control or supervision of a third party or
creditor.

(4) Rights that are normally exercisable but are temporarily incapable
of exercise are to continue to be taken into account.

5Rights attached to shares held by way of security

23 Rights attached to shares held by way of security provided by a
person are to be treated for the purposes of this Schedule as held
by that person—

(a) where apart from the right to exercise them for the purpose
10of preserving the value of the security, or of realising it, the
rights are exercisable only in accordance with that person’s
instructions, and

(b) where the shares are held in connection with the granting
of loans as part of normal business activities and apart
15from the right to exercise them for the purpose of
preserving the value of the security, or of realising it, the
rights are exercisable only in that person’s interests.

Significant influence or control

24 (1) The Secretary of State must issue guidance about the meaning of
20“significant influence or control” for the purposes of this Schedule.

(2) Regard must be had to that guidance in interpreting references in
this Schedule to “significant influence or control”.

(3) Before issuing guidance under this paragraph the Secretary of
State must lay a draft of it before Parliament.

(4) 25If, within the 40-day period, either House of Parliament resolves
not to approve the draft guidance, the Secretary of State must take
no further steps in relation to it.

(5) If no such resolution is made within that period, the Secretary of
State must issue and publish the guidance in the form of the draft.

(6) 30Sub-paragraph (4) does not prevent a new draft of proposed
guidance from being laid before Parliament.

(7) In this section “the 40-day period”, in relation to draft guidance,
means the period of 40 days beginning with the day on which the
draft is laid before Parliament (or, if it is not laid before each
35House on the same day, the later of the days on which it is laid).

(8) In calculating the 40-day period, no account is to be taken of any
period during which—

(a) Parliament is dissolved or prorogued, or

(b) both Houses are adjourned for more than 4 days.

(9) 40The Secretary of State may revise guidance issued under this
paragraph, and a reference in this paragraph to guidance includes
a reference to revised guidance.

Limited partnerships

25 (1) An individual does not meet the specified condition in paragraph
2, 3 or 4 in relation to a company by virtue only of being a limited
partner.

(2) 5An individual does not meet the specified condition in paragraph
2, 3 or 4 in relation to a company by virtue only of, directly or
indirectly—

(a) holding shares, or

(b) holding a right,

10in or in relation to a limited partner which (in its capacity as such)
would meet the condition if it were an individual.

(3) Sub-paragraphs (1) and (2) do not apply for the purposes of
determining whether the requirement set out in paragraph (a) of
the specified condition in paragraph 6 is met.

(4) 15In this paragraph “limited partner” means—

(a) a limited partner in a limited partnership registered under
the Limited Partnerships Act 1907 (other than one who
takes part in the management of the partnership business),
or

(b) 20a foreign limited partner.

(5) In this paragraph “foreign limited partner” means an individual
who—

(a) participates in arrangements established under the law of
a country or territory outside the United Kingdom, and

(b) 25has the characteristics prescribed by regulations made by
the Secretary of State.

(6) Regulations under this paragraph may, in particular, prescribe
characteristics by reference to—

(a) the nature of arrangements;

(b) 30the nature of an individual’s participation in the
arrangements.

(7) Regulations under this paragraph are subject to affirmative
resolution procedure.

Part 4 35Power to amend thresholds etc

26 (1) The Secretary of State may by regulations amend this Schedule for
a permitted purpose.

(2) The permitted purposes are—

(a) to replace any or all references in this Schedule to a
40percentage figure with references to some other (larger or
smaller) percentage figure;

(b) to change or supplement the specified conditions in Part 1
of this Schedule so as to include circumstances (for
example, circumstances involving more complex
45structures) that give individuals a level of control over