Peter Swabey, ICSA Policy and Research Director, gave an insight into what’s coming up on the legal and regulatory horizon, providing a stimulating and concise way to plan for what’s ahead, exchange ideas on best practice and network with peers and colleagues.

1. Policy update
Peter Swabey, FCIS,
Policy & Research Director, ICSA
Essex Branch - 22nd March 2016

2. Policy update
Agenda
Small Business, Enterprise and Employment Act 2015
PSC Register
Consultations
•FRC Succession Planning
•FCA Market Abuse Regulation and Directive
•EU non-binding guidelines for reporting non-financial information

3. Policy Update
The Small Business, Enterprise and Employment Act 2015
‘SBEE Act’
A product of the Red Tape Challenge ………

4. The Small Business, Enterprise and Employment
Act 2015
A revised timetable ………….. AGAIN (15)
Full details of the latest timetable can be found on the Companies House website
at :
https://www.gov.uk/government/news/the-small-business-enterprise-and-
employment-bill-is-coming

5. The Small Business, Enterprise and Employment
Act 2015
26 May 2015
Bearer shares were abolished. There is now a legislative timetable in place and
any existing bearer shares must be surrendered by 26 February 2016.
If your company has bearer shares in issue there is a statutory process on which
you should already have embarked – notices to holders were due to go out by 26
June 2015. If you do not have this in hand, you need immediate legal advice.

6. The Small Business, Enterprise and Employment
Act 2015
10 October 2015
The day element of the date of birth of directors was hidden from the public
register
The accelerated strike-off process was introduced – down to two months from
three – same with objections. Companies House no longer re-advertises a
Gazette notice once a valid objection has expired
The requirement to give consent to act as a director or secretary has changed.
The company confirms that consent has been given and Companies House will
write to all newly appointed directors.

7. The Small Business, Enterprise and Employment
Act 2015
April 2016 (was December 2015)
The process to rectify the register in the event of director disputes or registered
office disputes will be simplified.
If the director disputes the fact, the company must provide evidence of consent.
If a registered office address is disputed, Companies House will investigate and will
have power to change the ROA to a default address

8. The Small Business, Enterprise and Employment
Act 2015
6 April 2016
Companies will be required to keep a register of people with significant control
(a PSC Register)
Implementing regulations for companies and LLPs were laid before Parliament on
25 January, and that these can now be found:
Companies - http://www.legislation.gov.uk/ukdsi/2016/9780111143018
LLPs - http://www.legislation.gov.uk/ukdsi/2016/9780111143025

9. PSC Register: policy
There are five core elements to new Part 21A of the Companies Act 2006 (CA06):
1.The definition of a ‘person with significant control’
2.The legal entities in scope of requirements
3.Obtaining the information
4.The register
5.Disclosure of and access to the information
BIS have replicated or extended existing company law criminal offences to
deal with those who fail to provide information or provide false information.

10. PSC Register: definition
BIS have used the existing definition of ‘beneficial owner’ in the EU anti-money laundering
context as the basis.
New Schedule 1A to the CA06 sets out five ‘specified conditions’. An individual meeting
one or more of these conditions is a Person with Significant Control (‘PSC’):
1. Ownership of more than 25% shares
2. Ownership of more than 25% voting rights
3. Ownership of right to appoint or remove a majority of the board of directors
4. Right to exercise significant influence or control
5. Right to exercise significant influence or control over a trust or firm which trust or firm
would be a PSC, were it an individual)
In certain circumstances a legal entity must be noted in the register (‘relevant legal
entities’ or ‘RLEs’).

11. PSC Register: scope
All UK companies, except companies listed on UK regulated or
prescribed markets, and Limited Liability Partnerships will have to
keep a PSC register.

12. PSC Register: obtaining information
Companies must take reasonable steps to find out if they have any PSCs or RLEs
and identify them.
In some cases the company will already have this information.
In others the company will need to serve notice on individuals and others. A
person in receipt of such a notice is required to reply. Failure to do so is a criminal
offence. Shares may also be subject to restrictions by the company.
PSCs and RLEs are also required to disclose their interest in the company to the
company in certain circumstances.

13. PSC Register: the company’s register
Companies must hold and keep available for public inspection a PSC register. This will
contain information on the PSCs’:
•Full name
•Service address
•Country or state of usual residence
•Nationality
•Full date of birth
•Usual residential address (not publicly available)
•Date on which PSC obtained control
•The nature of his or her control over the company
Register must be kept up to date as information changes
People may access the register on request.

14. PSC Register: the central register
Companies must provide all the information in their PSC register to Companies
House on incorporation and then at least once every 12 months as part of the
new confirmation statement.
All information will be made available on the public register except:
• The full date of birth (only the month and year will be shown on the public
register, except where the company elects to keep its PSC information solely
on the register at Companies House)
• The usual residential address

15. PSC Register: the protection regime
Individuals at serious risk of harm will be able to apply to the registrar of
companies to prevent their information being publicly disclosed on the company’s
register and the central register.
Specified public authorities will have access to protected data on request.
BIS have recently consulted on this regime -
https://www.gov.uk/government/uploads/system/uploads/attachment_data/file/4379
74/bis-15-315-register-of-people-with-significant-control-consultation.pdf
Covers the scope, nature and extent of control, fees, the protection regime and
warning and restrictions notices

16. PSC Register: guidance
Two types of guidance:
•Statutory
•Non-statutory
The legislation requires the Secretary of State to publish statutory guidance,
which means that it has legal effect, on the meaning of ‘significance influence
or control’ in the context of the PSC register.

17. PSC Register: guidance
Non-statutory guidance has been produced by a working group on behalf of BIS.
This addresses such issues as:
•What is a PSC or an RLE and what do they need to do
•What information is being collected and why
•Who can access it and how
•Which companies are affected and what they need to do
•What ‘reasonable steps’ means
•What to do if you don’t receive the required information
•How to manage your PSC Register

18. PSC Register: guidance
Both sets of guidance can be found :
https://www.gov.uk/government/publications/guidance-to-the-people-with-
significant-control-requirements-for-companies-and-limited-liability-partnerships
- and on the ICSA website
BIS have indicated that further guidance for PSCs will be published next week.

19. PSC Register: ACTION
Companies should start considering whether they have one or more PSC’s. If they
do, ensure that these people can be identified and data collected. Although DTR5
companies (which have to comply with the Listing Rules) and some others are
exempt, the new requirements do apply to the subsidiaries of such companies.

20. The Small Business, Enterprise and Employment
Act 2015
30 June 2016
The new ‘check and confirm’ annual confirmation statement will replace the
annual return. Companies will be required to begin filing their PSC Register
information at Companies House. Private companies will also be able to choose to
keep some of their registers at Companies House on their check and confirm
date. The process for disqualifying directors will be ‘updated and strengthened’
and the statement of capital will be simplified.

21. The Small Business, Enterprise and Employment
Act 2015
1 October 2016
With specified exceptions, companies will no longer be able to appoint
corporate directors; they will have 12 months to remove any existing
corporate directors that are no longer allowed under the exceptions.
BIS have been consulting on the exceptions to the prohibition of corporate
directors. The implication is that companies will still be able to use corporate
directors for administrative purposes, provided that all the directors of the
corporate director are real people. It would be prudent to identify situations
where your company use corporate directors and consider how you will
comply with the new rules.

22. The Small Business, Enterprise and Employment
Act 2015
Late 2016 / early 2017
Some additional information will be able to be filed at Companies House – no
doubt we will hear more closer to the time.
The UK implementation of the EU’s 4th Money Laundering Directive, expected in
2017, will have an impact on the filing of PSC Register information – we await
information about the impact of this change.

23. Policy Update
Recent Consultations

24. Policy Update
Consultations
12th October – FRC Roundtable on Proxy advisers
22nd October – BIS Roundtable re PSC Guidance
5th November – FCA Amendments to Listing Rules
9th November - 2016 ISS Benchmark Policy
11th Dec – FRC Enhancing Confidence in Audit
24th Dec – ESMA European single electronic format
29th January – FRC Succession Planning
4th February – FCA re MAR implementation

25. Policy Update
Succession planning: discussion paper but FRC doesn’t intend Code changes
Market Abuse Regulation: Updating processes and informing/training directors
(have to be in place for April 2016)
Potentially a lot of work for some companies

26. Policy Update
Policy Roundup

27. Policy Roundup
Shareholder Rights Directive – currently stuck because there’s no agreement on
country by country reporting but otherwise agreed.
EU non-binding guidelines for reporting non-financial information: Consultation is
out but most of what they are suggesting companies do, we do already (and it’s
non-binding guidelines anyway). It’s implementation of the 2014 Directive

28. Policy Roundup
Government
Very keen on deregulation
New incarnation of the red tape challenge
Continue to emphasise the need for a company secretary in all companies

29. Policy Roundup
Stewardship
ICSA is working with a number of partners to help the FRC review the extent to
which the Stewardship Code has begun to have an impact on company and
investor engagement
Working with the Investment Association and the NAPF
Guidance on more effective stewardship
NB the Red Lines Voting initiative

30. Policy Roundup
Ethics and Culture
Working with FRC as part of the #culturecoalition to look at issues around
corporate culture.
Guidance on Board Effectiveness likely to be revised when this reports in the
Summer
Working with the IBE and Mazars on a piece of research looking at business
culture to be launched at the ICSA Conference on 8th / 9th March

31. Policy Roundup
The role of the Nomination Committee
Working with EY on a piece of research to be launched in May

32. Policy Roundup
Minute Taking
Working on a review of minute taking practice following the Treasury Select
Committee criticism of HBOS record keeping

33. Thought leadership from ICSA