Academy Trusts risk falling foul of new company ownership rules warns RSM
RSM is warning Academy Trusts they run the risk of penalties if they fail to comply with new rules on company ownership disclosure which came into force in April.
The new regulations require most UK companies and charitable companies, including Academy Trusts, to keep a register of those people who own or have significant control over them. All Academy Trusts and wholly owned subsidiaries which are subject to the new rules will also have to file details with Companies House from 30 June 2016.
The Register of People with Significant Control (PSC) Regulations set out five conditions by which a person may have significant control over a company. The most relevant of these conditions catches those who control more than 25 per cent of a company or who control more than 25 per cent of the voting rights. For Academy Trusts this means looking at the members. Academy Trusts with four members would not necessarily be caught by the new rules, but those with three or fewer could be.
The legislation was introduced to increase transparency in UK companies in order to foster greater trust among businesses, investors, employees and consumers.
Hannah Catchpool, an audit partner at RSM who specialises in Academy Trusts said: ‘In the wake of the Panama Papers affair, we’ve heard a lot about the action taken by the Government to increase transparency but the fact that these rules also apply to Academy Trusts may come as something of a surprise.
‘These new regulations have their origin in a G8 initiative to increase transparency around company ownership, notably for the benefit of the investment community. Arguably, the extension of this requirement to Academy Trusts is an unintended consequence, but this doesn’t absolve Academy Trusts from having to comply. Trustees need to ensure that action is taken now, otherwise they could face penalties.’
To summarise, there are four things which need to be done:
- IDENTIFY persons with significant control, obtain and confirm their information, if applicable;
- RECORD the information in your PSC register;
- DISCLOSE the information in your annual confirmation statement (formerly the annual return) to Companies House from 30 June 2016; and
- UPDATE the information in its PSC register when it changes and notify the changes to Companies House on the next confirmation statement.
It is important to remember that the PSC register should not be blank and therefore where an Academy Trust has no PSC it will need to confirm that, having taken reasonable steps, there is no registerable person or registrable relevant legal entity.
