A guide to PSCs for limited liability partnerships

Under the Limited Liability Partnerships (Register of People with Significant Control) Regulations 2016, every UK LLP is required to prepare and maintain a register of people with significant control (a ‘PSC register’). LLPs must also report their PSC information to Companies House, where it will be made publicly available in the UK’s register of companies.

Designed to enhance corporate transparency, the PSC register provides information on the people who ultimately own and control limited companies, LLPs, and other incorporated entities operating in the UK. In addition to helping inform investors and the general public, PSC information is beneficial to law enforcement agencies when conducting money laundering investigations.

If you decide to set up a limited liability partnership, the designated members of the LLP will be responsible for identifying all PSCs, recording their details in the PSC register, and giving notice of PSCs to Companies House. They must also update PSC information on the register and at Companies House when any changes occur.

What is a PSC?

A PSC is a person with significant control over an incorporated entity, such as a limited company or limited liability partnership (LLP). That is a person who has a significant degree of control or influence over the business, whether through an ownership stake or some other means.

To be classed as a PSC in an LLP, the individual must be a natural person and satisfy at least one of the following specified ‘nature of control’ conditions in relation to the LLP:

1. Holds (directly or indirectly) the right to share in more than 25% of the LLP’s surplus assets if it is wound up
2. Holds (directly or indirectly) more than 25% of the voting rights in the LLP – this condition relates to voting on matters which are to be decided upon by a vote of the LLP’s members
3. Has (directly or indirectly) the right to appoint or remove the majority of the LLP’s management
4. Has the right to exercise, or actually exercises, significant influence or control over the LLP
5. They otherwise have the right to exercise, or actually exercise, significant influence or control over the activities of a trust or firm which, whilst not a legal entity, would itself satisfy any of the conditions set out in any of the first four conditions if it were an individual

Generally, it is easy to identify PSCs for the purposes of the first three conditions. This will be the case for most small LLPs that are equally owned and operated by only a few members.

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However, identifying PSCs under the fourth and fifth conditions is often more complex. There are many circumstances where a person may have the right to exercise, or actually exercise, significant influence or control over an LLP, such as:

• through rights set out by an LLP agreement or some other agreement
• through rights attached to a financial interest
• being regularly or consistently involved in the management and direction of the LLP
• if their recommendations are always (or almost always) followed by members who hold the majority of the voting rights in the LLP, when they’re deciding how to vote

This highlights why it is important to have an LLP agreement and ensure that the roles and rights of all parties involved in the business (whether directly or indirectly) are clearly set out.

‘Excepted’ roles and relationships

In relation to the fourth condition, there are excepted roles and relationships that would not, on their own, result in the person exercising significant influence or control over the LLP for the purposes of the PSC register. These include:

• Providing advice or direction in a professional capacity – e.g. as a lawyer, accountant, management consultant, investment manager, tax advisor, or financial advisor
• Dealing with the LLP under a third-party commercial or financial agreement – e.g. as a supplier, customer, or lender
• Exercising a function under an enactment – e.g. a regulator, liquidator or receiver
• An employee acting in the course of their employment and as a nominee for their employer – e.g. an employee, director, or CEO of a third party that has significant influence or control over the business
• Where the person is a designated member of an LLP
• A person who makes recommendations to the LLP’s members on an issue (or set of issues) on a one-off occasion, which is subject to a vote of the members
• Any person or entity in relation to any association, professional standards organisation, or network of companies or firms that implements common rules, policies, or standards to be adopted by the members of the network, but does not otherwise have control of members of that network

The LLP statutory guidance for the PSC register provides more information and examples of what may constitute the right to exercise significant influence or control. We recommend reading this guidance in full to ensure your LLP correctly identifies all PSCs.

Can another company or LLP be a PSC?

By definition, a PSC is an individual (i.e. a natural person). However, if a legal entity (e.g. a limited company or another LLP) is in a position of influence or control in relation to an LLP, it may have to be entered in the LLP’s PSC register.

A legal entity is regarded as a ‘relevant legal entity’ (RLE) in relation to an LLP, if it would qualify as a PSC if it were a natural person, and:

• it keeps its own PSC register, or is an eligible Scottish Partnership (ESP) and provides information on its PSCs to Companies House, or
• it has voting shares admitted to trading on a regulated market in the UK, elsewhere in the European Economic Area, or on specified markets in Switzerland, the USA, Japan, or Israel

A relevant legal entity is only registrable in relation to a limited liability partnership if it’s the first RLE in the LLP’s ownership chain. In such instances, details of the registrable RLE must be entered in the LLP’s PSC register.

GOV.UK provides further guidance on relevant legal entities (section 2.2), including how to work out when an RLE is registrable in relation to an LLP.

Recording and reporting PSC information for an LLP

An LLP is required to record information about all PSCs and any registrable RLE in its own PSC register. This statutory register should be created as soon as the LLP is incorporated at Companies House.

Additionally, the LLP must provide the information held in its PSC register to Companies House, where it will be made publicly accessible in the central register of companies.

These PSC responsibilities fall to the designated members of the limited liability partnership.

Required information for PSCs (natural persons)

Upon identifying a PSC, the following information should be confirmed, recorded in the PSC register, and provided to Companies House:

• Full name
• Date of birth
• Nationality
• Country, state, or part of the UK where the person usually lives
• Service address (correspondence address)
• Usual residential address
• The date they became a PSC in relation to the LLP
• Nature of control that the individual has over the LLP

For privacy and security reasons, Companies House will not disclose a PSC’s residential address or day of birth on the central register. Only the month and year of birth will be made publicly available.

Similarly, since an LLP’s statutory registers are available for public inspection, the LLP should not record a PSC’s residential address or day of birth in its own PSC register.

However, if a PSC provides their residential address as their service address, this information will be publicly available on the central register and in the LLP’s own PSC register.

Required information for a registrable RLE

Upon identifying a registrable relevant legal entity (RLE), the following details must be confirmed, recorded in the PSC register, and provided to Companies House:

• Corporate or firm name
• Address (e.g. the RLE’s registered office address)
• The legal form of the RLE and the law by which it is governed
• If applicable, the register of companies in which the RLE is entered, including the country/state, and registration number in that register
• Date it became a registrable RLE in relation to the LLP
• Nature of control that the RLE has over the LLP

The ‘nature of control’ of a PSC or registrable RLE

When recording and reporting information on PSCs and registrable RLEs, you must state their ‘nature of control’ over the LLP. In other words, which of the five specified conditions they meet for being a PSC or registrable RLE in relation to the LLP, including quantification of their interest, where relevant.

• Condition 1 – The PSC or RLE holds, directly or indirectly, the right to share in any surplus assets of the LLP on a winding up, which may be more than 25% but not more than 50%, more than 50% but less than 75%, or 75% or more.
• Condition 2 – The PSC or RLE holds, directly or indirectly, voting rights in the LLP, which may be more than 25% but not more than 50%, more than 50% but less than 75%, or 75% or more.
• Condition 3 – The PSC or RLE holds the right, directly or indirectly, to appoint or remove a majority of those members who are entitled to take part in the management of the LLP.
• Condition 4 – The PSC or RLE has the right to exercise, or actually exercises, significant influence or control over the LLP. This only applies where a PSC or registrable RLE does not meet at least one of the first three conditions.
• Condition 5 (for trusts or firms) – This relates to the nature of control of a trust or firm over which an individual has significant control. The register must specify whether the condition applies to an individual who has the right to exercise, or actually exercises, significant influence or control over the activities of the trust or firm. The register must also specify which of the first four conditions the trust or firm would satisfy if it were a natural person.

Official wording must be used when recording the nature of control of a PSC or registrable RLE in the PSC register. This wording is set out in Annex 3 of GOV.UK’s Guidance on the register of people with significant control.

Give notice of PSCs at incorporation

When you form a limited liability partnership, you must provide details of all PSCs and any registrable RLE on the incorporation form.

If Companies House approves your application to set up an LLP, this information will be recorded and made publicly available on the central register of companies.

You must also enter these details in your own PSC register, which you should keep at your registered office address. Members of the public can make a request to inspect this register at any time.

PSC information after incorporation

If there are any changes to your LLP’s PSC information after incorporation, you must update your PSC register and notify Companies House using the appropriate form:

• Report a new individual becoming a PSC – form LL PSC01
• Report a legal entity becoming a registrable RLE – form LL PSC02
• Report an individual or legal entity ceasing to be a PSC or RLE of an LLP – form LL PSC07
• Change of details of an existing PSC (e.g. change of name or service address) – form LL PSC04
• Change of details of an existing RLE (e.g. change of name or registered office) – form LL PSC05

You can complete and file these forms free of charge online via Companies House service.

The information held in your LLP’s PSC register must be updated within 14 days of any such changes taking place.

Within 14 days of updating the register, you are required to report the changes to Companies House on the appropriate form. Companies House will then make the necessary amendments in the central register.

When it is time to file your next confirmation statement, you will be required to check and confirm that all PSC information held on the central register is correct and up to date.

Who is responsible for an LLP’s PSC register?

The designated members of an LLP are responsible for all statutory duties relating to the partnership.

This includes identifying PSCs and RLEs, gathering the required information, maintaining the PSC register, and reporting PSC information to Companies House.

Failure to comply with these duties is an offence, which can result in penalties for the LLP and its designated members.

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If you have any questions about PSC requirements for limited liability partnerships, please leave a comment below or get in touch with our company formation team.