The 6th April is a popular date for legislation to come into effect from, 6th April 2016 is no different. There are a number of changes which directly affect pensions – check out our summary of 12 pensions legislative changes here – but there is one change that corporate trustees should be particularly aware of:
From 6th April 2016 all UK companies (except for certain publicly listed companies) must maintain their own register of people with significant control (a ‘PSC register’) and share it with Companies House from 30 June 2016 as part of the filing of the Confirmation Statement. The register forms part of a global move by governments and other organisations towards greater transparency in corporate structures, with the aim of combating money laundering, terrorist financing and tax evasion. Whilst the UK is the first major jurisdiction to implement a public beneficial ownership register, the concept forms part of the Fourth Money Laundering Directive which will need to be implemented across the EU by June 2017.
A Person of Significant Control (“PSC”) is an individual who meets any of the following criteria:
- Holds over 25% of the shares;
- Holds over 25% of the voting rights;
- Has the right to appoint or remove the majority of directors
- Otherwise having the right to exercise, or actually exercising, significant influence or control
- Where a trust or firm would satisfy any of 1 to 4 was it an individual; any individual holding the right to exercise, or actually exercising, significant influence or control over the activities of the trust or firm.
If significant control is exercised through a Relevant Legal Entity (“RLE”) which itself has to keep a PSC register or which is listed on certain stock exchanges, details about that entity must be registered instead of the individual’s details. That way the same information does not have to be recorded on multiple registers but significant control can be tracked through chains of entities.
How does this affect pension schemes?
As lay trustees have become more aware of the individual risks of being a trustee the legal solution has often been to replace the board of trustees with a limited trustee company. The trustees in turn become directors of the corporate trustee, their role and obligations are broadly unchanged but the personal risks are greatly reduced.
Corporate trustees are generally UK registered companies and have the same governance requirements as any other such company including, now, the need to have in place a PSC register and to keep it up to date. Most corporate trustees will have a single RLE, its Principle Employer. However, consideration should be given to powers within the scheme rules, articles of association and any related agreement (e.g. shareholder agreements) to confirm PSC(s) and RLE(s).
All corporate trustees need to have a register in place NOW. If you are in the process of identifying your PSCs you still need a register saying exactly that, using the prescribed phrases. Failure to comply is a criminal offence.
Once the register is set up, it should be maintained as an ongoing process where the company monitors, identifies and confirms any PSCs throughout the year and then file the PSC register each year with Companies House. Your advisers should be able to help with this, if your corporate trustee is a sole professional trustee they should already have a PSC register in place.
Full guidance can be found: