Posted by Malcolm Gregory, Partner
On the Hunt – a failure to declare as a person of ‘significant control’
Jeremy Hunt, Secretary of State for Health and Social Care, has been reported to the Parliamentary Commissioner for Standards following a failure to declare his 50% interest in a property development company and the Company’s failure to register him as a person of “significant control” (“PSC”) with Companies House. But what is a PSC and what are the consequences of non-compliance?
To declare or not to declare?
Jeremy Hunt has been referred to the Parliamentary Commissioner for Standards due to a delay in declaring a 50% interest in Mare Pond Properties Limited.
The company was supposedly set up by Jeremy Hunt and his wife in 2017 to purchase seven luxury flats in Southampton. Jeremy Hunt has publically apologised and his spokesman has described this as an “honest administrative mistake”.
What is the PSC Regime?
As explained in our previous blogs on the subject here and here, an individual is a PSC if they meet one or more of the specific conditions set out in the Companies Act 2006. These conditions include:
- holding more than 25% of the voting rights in a company
- possessing the right to appoint or remove a majority of the board of directors
- having the right to exercise significant influence or control over the company.
As Jeremy Hunt held more than 25% of the voting rights in the company, it was obliged to notify Companies House.
There are further obligations as well: companies are required to create an internal register of PSCs which identifies all persons with significant control of the company. This register must be made available for inspection by anyone and without charge, if requested.
Companies must be mindful that after creating an internal PSC register, there is a continuing obligation to ensure the register is accurate and up to date. At the very least, companies must update this register and notify Companies House within 14 days after the day the company makes the change to its PSC.
There were also additional obligations on Jeremy Hunt; due to his public office he was required to register his interest with the Parliamentary Commissioner for Standards.
What are the consequences?
As Jeremy Hunt has been found to be in breach of the PSC regime, this could result in criminal liability.
The following are just some of the criminal offences for failing to comply with the PSC regime:
- failure to keep a register of PSC – a fine of up to £1,000
- failure to notify Companies House of where the PSC register is kept – a fine of up to £1,000
- failure to notify Companies House of a PSC within 14 days of making the change – a fine of up to £1,000.
Generally speaking, Companies House operates a compliance-led enforcement policy, as opposed to pursuing criminal prosecutions. Regardless, being in breach of the PSC regime will undoubtedly have reputational damage, as we have seen with Jeremy Hunt.
Here are our recommendations:
- check you understand the obligations
- make sure the information on Companies House is accurate
- create an internal register which provides all the required information on the PSCs
- ensure that this register can be made available for inspection, if requested
- remember to update Companies House and internal registers as and when it is necessary.
If you would like more information on the PSC register regime or to discuss any other corporate or commercial law matter, please contact our Corporate team on:
0800 182 2453 Email us
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