PSC Records for LLPs – A recap on the basics
Since 2016, companies and LLPs have had to maintain a PSC Register, and update PSC information at Companies House. In a follow-up to our earlier article about company’s PSCs, in this article, we provide a recap of the basic PSC rules as they apply to your LLP.
Who is a PSC? The basics – Rights to surplus assets, voting rights and appointing the management
A person with significant control (PSC) is an individual who meets any of the basic criteria for your LLP, as follows:
- They hold the right to more than 25% of the surplus assets on winding up
- They hold more than 25% of voting rights
- They hold the right to appoint or remove the majority of the management of the LLP
- This is generally assumed to be the case for anyone holding over 50% of voting rights
The PSC is registered under each of the three categories where they meet the minimum threshold. These ‘conditions of control’ are broken down into bandings for each PSC:
- More than 25% but not more than 50% of surplus assets/voting rights
- More than 50% but less than 75% of surplus assets/voting rights
- 75% or more of surplus assets/voting rights
When reviewing the LLP’s PSC records, it is important to consider any special provisions in the LLP Agreement.
PSCs with ‘Significant Influence or Control’
Even if an individual does not meet any of the basic criteria as above, they may still be registrable as a PSC if they are considered to exercise (or have the right to exercise) significant influence or control over the LLP.
The statutory guidance does not set out exhaustive and prescriptive examples, but in practice a PSC with significant influence or control might be someone who:
- Is likely to receive more than 25% of the profits of the LLP
- Has absolute decision rights or veto rights over decisions relating to the running of the business
- Is involved in the day to day management of the LLP where they are not a member
- Whose recommendations are always or almost always followed.
Common examples might include a family figurehead or founder.
What is an RLE? Corporate LLP Members
What if your LLP has a corporate member, rather than all individuals? In that case, you still need to consider the PSC rules in respect of the corporate members.
A corporate LLP Member may be registrable as an RLE (relevant legal entity) if:
- It meets the basic criteria as above (holding rights to more than 25% of surplus assets on winding up and/or voting rights, holding the right to appoint or remove the majority of the management)
- It is required to hold its own PSC records (eg. Another UK registered company or LLP)
The RLE would be registered in the PSC records if it is the first registrable entity in its ownership structure.
Overseas Corporate LLP Members
As a general rule, overseas companies cannot be registered as RLEs as they do not hold their own PSC records. The exceptions would be for companies listed on a market in the UK/EEA or on a ‘specified’ market in the USA, Israel, Switzerland or Japan.
When an overseas company is a member of an LLP, it is necessary to ‘look up’ the ownership chain to identify anyone holding a ‘majority stake’ in the overseas company (typically, anyone holding more than 50% of voting shares).
The ‘majority stakeholder’ would then be registered as a PSC ‘representing’ the overseas corporate LLP member.
Whilst this article provides a review of the basic rules concerning LLP PSC records, we know that every LLP is different. If you wish to discuss your LLP’s PSC records, please contact us today.