Charitable companies and charities which have subsidiary trading companies need to comply with new rules on “persons with significant control” which came into effect on 6th April 2016.

The new rules are contained in the Small Business, Enterprise and Employment Act 2015 and are aimed at increasing the level of transparency around how companies are controlled. There are two main changes which companies need to be aware of:-

  • From 6th April, every company, including charitable companies, must maintain a register of “persons with significant control”, even if that register only discloses that there are no such people. Failure to maintain this register is a criminal offence;
  • From 30th June 2016, every company must give details about their register of “persons with significant control” to Companies House along with their annual confirmation statement (which will replace the annual return for companies).

Persons with significant control include people falling into a number of different categories and can include parent companies or other legal entities. The categories of people include individuals who can exercise more than 25% of a company’s voting rights, which would particularly apply where a company has only three directors or charity trustees. Disclosures must also be made where an individual has the ability to appoint or remove a majority of the directors of a company or have rights to exercise significant influence or control over a company.

It is critical that charitable companies and charities which have subsidiary trading companies comply with the new rules. Charity trustees and directors of subsidiary companies should consider now whether they comply and, if not, what they need to do in order to come up to speed. Detailed guidance can be found in our briefing note, here.

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