Requirements for SLPs to disclose their beneficial owners
Since Scottish Partnerships (Register of People with Significant Control) Regulations 2017 have come into force on 26 June 2017, Scottish Limited Partnerships (SLP) are required to disclose their people with significant control (PSC). Information about PSC should be delivered to the Companies House within 14 days from 24 July 2017.
A PSC is an individual who meets any one or more of the following conditions in relation to a Scottish Limited Partnership:
- Directly or indirectly holds rights over more than 25% of the surplus assets on a winding up;
- Directly or indirectly holds more than 25% of the voting rights;
- Directly or indirectly holds the right to appoint or remove the majority of those involved in management;
- Otherwise has the right to exercise or actually exercising significant influence or control;
- Holds the right to exercise or actually exercising significant influence or control over the activities of a trust or firm which is not a legal entity, but would itself satisfy any of the first four conditions if it were an individual.
When the PSC has been identified, the following details of the PSC must be obtained, confirmed and then delivered to Companies House:
- Date of birth;
- Country, state or part of the UK where the PSC usually lives;
- Service address;
- Usual residential address. If the residential address has already been given because it is also the service address, then you do not need to give it again;
- The date when the individual became a PSC in relation to the SLP;
- Which of the five conditions for being a PSC the individual meets, with quantification of the interest where relevant.
- For a PSC who meets one or more of conditions (i) to (iii) the SLP is not required to identify whether they also meet condition (iv);
- The official wordings must be used (see pages 94-99 of Annex 5: Guidance for eligible Scottish partnerships);
- Any restrictions on disclosing the PSC information that are in place.
Information about a PSC must be confirmed before being delivered to Companies House. Information can be treated as confirmed if:
- PSC supplied the SLP with the information;
- The information was provided to the SLP with the knowledge of the PSC;
- PSC was asked by the SLP to confirm that the information was correct, and replied that it was so; or
- SLP holds previously confirmed information and has no reason to believe it has changed.
If SLP identified a PSC but cannot confirm the information about them, it must disclose this on the register using the official wording.
SLP has a duty to investigate and obtain information:
- SLP must take reasonable steps to find out if any person is a registrable person in relation to the SLP, and if so, to identify them.
- SLP must give notice to any person whom it knows or has reasonable cause to believe to be a registrable person in relation to it.
- The notice, if addressed to an individual, must require the addressee to state whether or not the individual is a registrable person in relation to the SLP, and if so, to confirm or correct any particulars of the individual that are included in the notice, and supply any that are missing.
SLP has a duty to keep information up to date:
- SLP must give notice to the registrable person or registrable relevant legal entity if the SLP knows or has reasonable cause to believe that a relevant change has occurred.
- In the case of a registrable person, a “relevant change” occurs if the person ceases to be a registrable person in relation to the SLP, or any other change occurs as a result of which the particulars stated for the registrable person in the register in respect of the SLP are incorrect or incomplete.
After 24 July 2017 SLP must give the notice within the period of 14 days beginning with the day it learns of the change.
If SLP fails to comply with a duty to take steps or give notice, an offence is committed by the SLP and every officer of the SLP who is in default.
A person guilty of an offence under this regulation is liable on conviction on indictment to imprisonment for a term not exceeding two years or a fine (or both). A person guilty of an offence under this regulation is liable on summary conviction to imprisonment for a term not exceeding three months or a fine (or both).
|Summary of PSC conditions for SLPs|
|Condition:||What you need to consider:|
|(i)||Directly or indirectly holding rights over more than 25% of the surplus assets on a winding up||Partnership agreement and other agreements which might be relevant, for instance between a subset of partners, or between a partner and a nonpartner|
|(ii)||Directly or indirectly holding more than 25% of the voting rights||Partnership agreement and other agreements which might be relevant, for instance between a subset of partners, or between a partner and a nonpartner|
|(iii)||Directly or indirectly holding the right to appoint or remove the majority of those involved in management||Partnership agreement and other agreements which might be relevant, for instance between a subset of partners, or between a partner and a nonpartner|
|(iv)||Otherwise having the right to exercise, or actually exercising, significant influence or control||You should consider whether anyone else who does not meet one or more of conditions (i) to (iii) has significant influence or control over the SLP, irrespective of any formal role. The definition of significant influence or control can be found in the separate Guidance|
|(v)||Holding the right to exercise, or actually exercising, significant influence or control over the activities of a trust or firm which is not a legal entity, but would itself satisfy any of the first four conditions if it were an individual||You should consider whether there is a trust or firm which would have met any of the first four conditions if it were an individual. Where this is the case, you should deliver information on the trustees to Companies House and showing whichever of the first four conditions apply. You then need to consider whether anyone has significant influence or control over the activities of that trust or firm|
According to the condition (iv) PCS should have the right to exercise or actually exercises significant influence or control.
To find out a person who is actually exercising significant influence or control it is necessary to take into account all relationships of a person with SLP or other persons participating in management of SLP:
- A person would exercise “significant influence or control” if he/she is involved in the management and direction of the eligible Scottish partnership. For example, a person, who is not a member of a management body, but regularly or consistently directs or influences a significant section of management, or is regularly consulted on management decisions and whose views influence decisions made by those involved in management.
- A person would exercise “significant influence or control” if his/ her recommendations are always or almost always followed by partners who hold the majority of the voting rights in the eligible Scottish partnership, when they are deciding how to vote. For example, an eligible Scottish partnership’s founding partner who no longer has a formal interest in the eligible Scottish partnership they started, but makes recommendations to partners on how to vote and those recommendations are always or almost always followed.
In reality not only general partner but also person authorized by Power of Attorney (POA) may exercise management of the SLP. Such an attorney according to the scope of awarded powers, can be recognized as PSC by condition (iv).
A person with significant control under condition (iv) is also a person who is the beneficial owner of the SLP on the grounds of the Declaration of Trust.
For instance, SLP has nominee partners (offshore companies) on whose behalf a Declaration of Trust was issued in favor of the beneficial owner. In accordance with this declaration partners act as nominee holders of the partnership interest and undertake to follow the instructions of the beneficiary.
The following is a non-exhaustive list of roles and relationships which would not, on their own, result in that person being considered to be exercising significant influence or control for the purposes of the fourth condition:
- Where the person provides advice or direction in a professional capacity, for example, as a lawyer; an accountant; a management consultant; an investment manager; a tax advisor; or a financial advisor;
- Where the person deals with the SLP under a third party commercial or financial agreement, for example, as: a supplier; a customer; or a lender;
- Where the person exercises a function under an enactment, for example: a regulator; a liquidator or receiver;
- Where the person is an employee acting in the course of their employment and nominee for their employer, including an employee, director or CEO of a third party (such as a corporate member company), which has significant influence or control over the SLP;
- A person who makes recommendations to partners on an issue, or set of issues, on a one off occasion, which is subject to a vote of the partners.
Thus, SLPs must take the following steps:
- From 26 of June 2017 Scottish Partnerships shall identify their people with significant control. This procedure involves sending to a person presumed to be PSC a notification and receiving confirmation from such person.
- From 24 of July 2017 all SLPs will need to file a confirmation statement within 14 days. If they fail to do so, these partnerships will face daily fines of up to £500.
- Then confirmation statement must be made annually at least once a year within 14 days of the end of the review period. It’s a criminal offence of the SLP and its officers not to file your confirmation statement within 14 days of the end of the review period.
- You must make a confirmation statement even if there haven’t been any changes during the review period.
- For SLPs registered before 26 June 2017 the review period is the period of 12 months beginning with 24 July 2017. Subsequent review periods will be a period of 12 months beginning the day after the end of the previous review period. For SLPs registered on or after 26 June 2017 the review period covered by an SLP’s first confirmation statement begins on the date of registration and ends 12 months later.
- An SLP can make a confirmation statement at any time during the review period. The period covered by a specific confirmation statement is known as the confirmation period which can be shorter than the review period, but it cannot exceed the review period. It cannot be longer than 12 months. If an SLP makes a confirmation statement early, its next review period will start the day after the date of that confirmation statement.
- The fee for filing the SLP confirmation statement form is £17. If you file more than one confirmation statement in a 12 month period, you’ll only need to pay the fee once.
Tags: beneficial owners, offshores, Scotland, UK