This document summarizes a presentation on recent developments regarding the public sector companies register (PSC) regime and the requirements of the UK Modern Slavery Act of 2015. The presentation covers the key aspects of the new PSC regime for registering persons with significant control over companies and limited liability partnerships. It also outlines the requirements for companies to publish annual anti-slavery statements under Section 54 of the Modern Slavery Act, and discusses whether and how these requirements apply to public authorities. Potential future changes to both the PSC regime and the Modern Slavery Act are also briefly mentioned.

1. Public sector breakfast club
April 2017, Exeter

2. Recent developments:
The PSC regime and Modern
Slavery Act requirements
Emma Grant

3. Introduction
Today’s speaker:
Emma Grant
Professional Development Lawyer – Business Services

4. What will we cover?
• Introduction to the PSC regime – and anticipated
changes to it
• Introduction to the requirements of section 54
Modern Slavery Act 2015
• Any questions?

5. The PSC regime
• A new statutory register for all unlisted companies
and LLPs

6. All about the new PSC regime…
• Who? All UK companies (non-listed) and LLPs
• What? New register to identify and record PSCs (stipulated
information)
• When? 6 April 2016 (internal) and 30 June 2016 (file at
Companies House when confirmation statement due or on
new incorporation)
• Why? Transparency, trust, terrorist funding, tax evasion
• How? Small Business, Enterprise and Employment Act 2015
(SBEEA) plus statutory instruments and guidance

7. What do companies need to do?
• Internal register – 6 April 2016
• Reasonable steps to identify PSCs (plus notices)
• Confirm/enter required information on register &
update
• Available for inspection (free) or copies (£12)
• File at Companies House – 30 June 2016
• Must have a PSC register – never be blank
• Prescribed wording outlining level of control
• Criminal offence if fail to comply

8. Who is a PSC?
Fulfils one or more of the 5 control conditions:
1. Holds, directly or indirectly, more than 25% of shares*
*for guarantee companies read this as entitled to more than 25% of profits
and/or capital
2. Holds, directly or indirectly, more than 25% of voting rights
3. Has the right, directly or indirectly, to appoint or remove a majority of
the board of directors
4. Has the right to exercise, or actually exercises, significant influence or
control (see guidance – nb minority protections, directors, employees,
professional advisers)
5. Exercises, or has the right to exercise, significant influence or control
over a trust or firm, which itself meets any of above conditions

9. What if my company isn’t owned
by a “living” person?
• Many company’s not owned directly by individuals – part of a wider
corporate group structure
• PSC regime recognises this – has concepts of indirect ownership
and “relevant legal entities” (RLEs)
• Can simply include immediate parent if it is a legal entity that is
“relevant” and “registrable” i.e.:
– It meets one or more of four control conditions and keeps own PSC
register/listed on relevant exchange AND
– Is the first RLE in ownership chain
• So, position straightforward for wholly owned subsidiaries
• Logic = follow the chain of PSC registers to the top of the group

10. So when do I record indirect
ownership?
• Generally don’t need to – unless legal entity they hold
interest through is not an RLE
• For example, company is owned by an overseas unlisted
company
• “Look through” such entity to find any person or RLE
that holds majority stake
• Majority stake: majority voting rights, appoint/remove
majority of board, right to exercise or actually exercise
dominant influence

11. Examples
1. 2. 3.
50% 50%
UK Company A
P1 P2
UK Company B
PSCs = P1 + P2
100%
P1
UK Company Z
UK Company Y
UK Company X
Company Z PSC
register = P1
Company Y
PSC register
= Company
Z
Company X
PSC register =
Company Y
Still need a PSC register stating
no PSCs
No PSCs (unless
arrangements)
100%
100%
20% 20% 20% 20% 20%

12. Common public sector scenarios…
• Companies limited by guarantee rather than shares
– what’s the difference?
• Local authority shareholder – are they an RLE?
• “Other registrable persons” (ORPs)
• Other public bodies as shareholders – how are they
categorised?
• Do CICs need to keep a PSC register?

13. Is the PSC regime changing
already?
• Unfortunately yes!
• 4MLD – 26 June 2017 (unaffected by Brexit vote)
• More entities potentially in scope
• Keep public information up to date more
frequently than annually
• Other associated developments?

14. Practical points
• What does the PSC register look like? Is there a
specific form?
• Electronic or hard copy?
• Where do I keep it?
• Do I need to file it at Companies House?
• Who can ask to inspect it or have copies?
• Can a PSC object to having their PSC details on the
public register at Companies House?

15. Modern Slavery Act 2015 (MSA)

16. An intro to the MSA
• What does it cover?
• What is modern slavery?
• Section 54: slavery and human trafficking
statement
• Into force 29.10.2015
• Also note:
– MSA and procurement processes
– Section 52 MSA

17. What is required under section
54?
• Commercial organisations
• Supplying goods or services in the UK
• Have an annual turnover of £36m or more
• Prepare and publish slavery and human trafficking
statement
• For each financial year
• Note transitional provisions re: timing of
publication of first statement

18. Does this catch public
authorities?
• “Commercial organisation”: a body corporate or
partnership which carries on a business or part of a
business in any part of the UK
• “Business” includes a trade or profession
• Does not expressly include or exclude local
authorities – which would be considered “bodies
corporate”, but not naturally described as
“carrying on a business”
• So, what does the government guidance say?

19. “Transparency in Supply Chains”
Guidance
“The Government expects that whether such a body or
partnership can be said to be carrying on a business will
be answered by applying a common sense approach… it
does not matter if it pursues primarily charitable or
educational aims or purely public functions. The
organisation will be caught if it engages in commercial
activities and has a turnover of £36m, irrespective of the
purpose for which profits are made.”

20. Local authorities in scope?
• LA’s regularly supply goods and services
• Many have trading companies which do the same
• Guidance seems to indirectly suggest where a local
authority engages in commercial activities, it could
potentially be caught by s54 if it meets other criteria
• But not expressly covered in the MSA or guidance, so
how to deal?

21. The statement
• Publish on website re: each financial year
• Within 6 months of the relevant FYE
• Approved by the board
• Signed by a director
• Steps taken to ensure modern slavery and human
trafficking is not taking place in any part of
business or supply chain – or say taken no steps
• No mandatory content or length, BUT…

22. The statement should cover:
• Organisation’s structure, business and supply chains
• Policies in relation to slavery and human trafficking
• Due diligence processes re: slavery and human
trafficking in organisation’s business/supply chains
• Parts of business where risk of slavery and human
trafficking
• Effectiveness in ensuring slavery and human trafficking
not taking place – measured against KPIs
• Staff training

23. Failure to comply
• No initial fine
• Secretary of State can enforce via injunction
• Reputational damage / media scrutiny biggest risk
• Possible naming and shaming

24. Future changes to the MSA?
• PM a big advocate – likely to remain high on the agenda
• First annual report from UK’s anti-slavery commissioner
published – what does this tell us about the future?
• Modern Slavery (Transparency in Supply Chains) Bill
– Started life as private members Bill
– Went through House of Lords, but then withdrawn
– Why was it withdrawn? What did its key themes tell
us?

25. Modern Slavery (Transparency in Supply
Chains) Bill – what can we learn from it?
• Now withdrawn – why?
• What were its key themes and what do they tell us?
– Sought to explicitly extend requirements of s54 to public bodies
– Wanted statement to be included in organisation’s annual
report and accounts
– Sought to insert a new paragraph into the Public Contracts
Regulations 2015
– Wanted Secretary of State to publish a list of all “in scope”
commercial organisations

26. Any questions?
Emma Grant
emma.grant@brownejacobson.com
0115 934 2043
07787 501167