2. ICSA 125: The Governance Institute
Simon Osborne FCIS, Chief Executive, ICSA
3. 125 years of leading governance
ICSA125
This October we celebrate 125 years since the
institute first was first formed.
• 1891: the Institute of Secretaries
• 1971: the Institute of Chartered Secretaries and
Administrators
• 2016: ICSA: The Governance Institute
4. 125 years of leading governance
• Positioning ourselves for the future
• ICSA: The Governance Institute
• Royal Charter to lead ‘effective governance and
efficient administration of commerce, industry and
public affairs’
5. 125 years of leading governance
Where we’re heading:
• ICSA to be the provider of products and services to support
the skills and knowledge of professionals working in
governance and legal and regulatory compliance roles in
organisations of all types and sizes and in any sector
• A wider set of products and services, particularly
qualifications, for people outside of the corporate market
• Revision of qualifications to keep them current and in
demand
• Higher public profile in the media
6. 125 years of leading governance
How we’re getting there:
• Continued focus on raising our public profile
• Increased public profile courtesy of the Policy team, ie
Code of Governance for CCGs, blogs, technical briefings,
articles, speaking at events and responding to
consultations
• Positioning ICSA as a thought leader in national and
regional media
• Governance and Compliance magazine
• Research projects
• www.icsa.org.uk
7. 125 years of leading governance
Encouraging the future faces of governance:
• One to Watch, ICSA Awards
• Tom Morrison Essay Prize
8. 125 years of leading governance
Governance professionals are right at the heart of things,
promoting accountability, transparency, integrity and
stewardship to ensure that organisations operate in a manner
which is most productive.
‘Governance focus has increased, the company secretary’s
role has increased, [there is] more work to do, and that work is
more visible.’ (The Company Secretary: Building trust through
governance, Henley Business School)
The study, development and practice of governance are here
to stay.
ICSA: The Governance Institute has a bright future
ahead of it!
9. Regulatory Update
Ro x a n n e O l d h a m – D i r e c t o r
Po l i c y, L e g a l a n d A u t h o r i s a t i o n s
1 1 M a y 2 0 1 6
10. Creating one organisation – the beginning
• IOMFSA created wef 1 November 2015 - simultaneous
dissolution of FSC and IPA
• Legally complete at that time – functions transferred
etc.
• New CEO – Ms Karen Badgerow
• New Board – some from each of ex-FSC/IPA, some
entirely new
11. Creating one organisation – current state
• CEO meetings – engagement with industry, all staff
and other stakeholders
• One team internally – sharing of knowledge, best
practices, resources, expertise
• Key priorities established – some reprioritisation /
some new priorities
• Getting on with business – ICP project, crowdfunding,
alternative banking, secondary legislation update
12. Creating one organisation – future state
• Considering how we regulate – supervisory style – collaboration
with stakeholders, implications and impacts of regulatory
requirements, principles vs rules
• Considering what we regulate – embrace innovation, focus on
the risks, whilst remembering equivalence is needed for market
access
• Programme review –
• Purpose, vision and values
• Process review (core activities / streamlining / IT system)
• Review of delegated authorities - “the right decisions, at the
right level”
• Alignment of legal and regulatory frameworks
• Operational review (HR, infrastructure)
13. Recent initiatives – crowdfunding platforms
• Legislation - came into effect 1 May 2016
• New class of regulated activity under FSA08 – Class 6
• Loan based crowdfunding – bringing together lenders
and borrowers through an online platform
• Investment based crowdfunding - bringing together
investors and issuers of equity through an online
platform
• Balance of two important objectives – innovation in
finance and importance of start up and second phase
funding to new businesses vs consumer protection
14. Recent initiatives – alternative banking
regime
• Legislation – currently in draft – consultation closes 14 May - still
time to comment
• Splitting of existing class of regulated activity under FSA08 –
Class 1 (deposit taking)
• New Class 1(2) – banks that do no retail business of any kind,
purely for corporates and ultra HNW – not in compensation scheme
• Also Class 1(3) – representative offices (very limited)
• Majority of existing banks remain Class 1(1) – general business
including retail clients, remain within compensation scheme
• Initial indications – niche banking
15. On the horizon
• Further industry engagement
• Credit Unions within regulatory legislation
• Rule Book consultation
• Further consultation on Insurance (Amendment)
Bill
• Recovery and resolution
• Please watch the website – newsletters etc.
17. Presentation to the Institute Chartered Secretaries
Association – 11 May 2016
Karen Ramsay, Head of National Risk Assessment
Cabinet Office
18. What we will cover
Importance of the evaluation to the IOM
Who are MONEYVAL
What they are looking for
The assessment team
The interviews
The process after the on-site visit
Questions
19. MONEYVAL EVALUATION 2016
Last full evaluation by the International Monetary Fund
in 2008.
Report published in 2009.
IOM 10th equal with Estonia; Hungary; Portugal and the
UK.
IOM joined MONEYVAL in 2012.
Onsite evaluation took place 25th April – 6th May 2016.
21. What is MONEYVAL looking for?
Work for the MONEYVAL evaluation began in Autumn 2014
2 detailed questionnaires have been submitted by the IOM
Technical compliance is assessed by off-site review
The on-site evaluation aims to test effectiveness
The effectiveness test is a new part of the assessment process
A country can have a good technical framework in place, but if
it is not being appropriately utilised, then the AML/CFT
regime cannot be fully effective.
13 jurisdictions have so far gone through the whole process
the rest will be evaluated over the next 10 years
22. Assessors
Michael Stellini – team leader – Head of MONEYVAL’s
AML/CFT Monitoring Unit
Matis Maeker – financial specialist – from Estonia
Radoslaw Obczynski – financial specialist – from Poland
Amar Salihodzic – law enforcement specialist – from
Lichtenstein
Yehuda Shaffer – legal specialist – from Israel
Stela Buic – legal specialist – from Moldova
Veronica Mets – MONEYVAL Secretariat
Andrey Frolov – MONEYVAL Secretariat (Admin.)
Andrew Le Brun –Trainee Secretariat – from Jersey
23. What the Assessors have been doing
MONEYVAL met with supervisors, investigators, prosecutors
and industry (in total 80 meetings in 8.5 days).
Meetings included 8 banks; 7 insurance/pensions providers; 7
TCSPs; 5 Funds/Securities firms; 5 online gambling firms and 4
legal firms.
The purpose was to understand more complex issues and
confirm known information.
MONEYVAL assess the Isle of Man as a jurisdiction and not the
businesses operating in or from here.
Responses are used in aggregate to identify themes and trends.
Businesses will not be named in any report, public or private.
24. Interviews
The main object of the visit was to conduct interviews to
evidence effectiveness.
Meetings took place in the Cabinet Office.
Week 1 mainly (not wholly) meetings with Government and
Week 2 with industry.
MONEYVAL selected the firms it requested to meet with.
No regulator or government attendance at the meetings with
industry.
It was for the business to decide who to field - directors,
MLROs and Compliance staff attended in the main.
25. How did it go?
Everyone turned up for their meetings – on time and
prepared.
It was apparent that the assessors had taken note of the
NRA both from the scoping note (sent in advance) and
from the direction of questioning during the interviews.
Early indications are that there are no major surprises
However, hard to assess fully at this point - we will need to
see the draft report.
Process is a ‘critical’ one and so it is difficult to get a
balanced view from the 2 week on-site
26. After the onsite visit
MONEYVAL procedures state that a first draft report will
be made available 2 months after the on-site visit
Reviewers will assess the assessors
September 2016 – face-to-face meeting with assessors
The report will be scrutinised by member countries before
adoption by MONEYVAL at their December 2016 plenary
meeting
FATF, IMF and the World Bank will be invited to assess the
draft report for consistency of marking
Publication is expected early 2017
27. Contacts Cabinet Office
Karen Ramsay, Head of NRA, karen.ramsay@gov.im
Phone: 685332
Joanne Hetherington, NRA Manager
joanne.hetherington@gov.im
Phone: 698369
Paul Heckles, AML/CFT Advisor, paul.heckles@gov.im
Phone: 685641
61. Easy to go wrong - Difficult to fix
There are practical solutions
Stimulating Boardroom
Energy
Sharon Constançon
sconstancon@geniusmethods.com
0207 612 9557
62. The Limits of Regulation in
Establishing Improved
Governance
Simon Osborne FCIS, Chief Executive, ICSA
63. The Limits of Regulation in Establishing Improved
Governance
Overview
Today I would like to cover governance from a regulatory perspective, in
particular
• the limitations of the ways in which regulators attempt to influence
governance
• the unrealistic expectations about the difference they can make
64. The Limits of Regulation in Establishing Improved
Governance
The regulatory tool kit
Regulators have various tools at their disposal to address governance.
• Those actions intended to set out minimum acceptable standards and
punish those who don’t meet them
• Those actions that are intended to raise standards above that minimum.
This includes codes, guidance and exercising restraint
• Those actions intended to make market discipline work, eg disclosure
requirements
65. The Limits of Regulation in Establishing Improved
Governance
Regulation: the panacea
• Regulation to deter reckless behaviour, eg banks post financial crisis
• Regulation to stabilise, eg Bank of Uganda’s move to strengthen banks’
balances sheets
• Regulation to encourage growth. Banking resilience brings comfort to
savers and means that people can borrow more, ultimately making the
sector more competitive
66. The Limits of Regulation in Establishing Improved
Governance
Clarity is key
• Regulators need to be clear about the objective they are trying to
achieve
• Can multiple objectives be met by a single measure?
67. The Limits of Regulation in Establishing Improved
Governance
Regulatory track record
Looking specifically at corporate governance in the UK, how have we
done?
• Real progress has been made in overall standards of governance
• Better run and better advised boards
• Better board composition
• Diligent directors with a clear understanding of responsibilities and
duties
• Better risk management at the top
68. The Limits of Regulation in Establishing Improved
Governance
UK Corporate Governance Code: the good
• First Code was a market-led initiative with the objective of raising
standards, while allowing flexibility in how to achieve them
• Explicit support of the UK government and regulators as an alternative to
formal regulation
• By adding “comply or explain” requirement to the Listing Rules, the Stock
Exchange ensured there was an element of market discipline
69. The Limits of Regulation in Establishing Improved
Governance
UK Corporate Governance Code: the not so good
• There are limits to what it can achieve
• Certain systemic problems remain, eg directors’ remuneration
70. The Limits of Regulation in Establishing Improved
Governance
Unrealistic expectations: Directors’ remuneration
• First addressed in the Greenbury Report in 1995
• Guidelines on the make-up of remuneration packages
• Voluntary disclosure
• 2002 - mandatory reporting and an advisory vote
• 2013 - binding vote and additional reporting
71. The Limits of Regulation in Establishing Improved
Governance
Directors’ remuneration
Reporting and voting is a classic “market discipline” mechanism. It gives
the job of disciplining companies to investors.
Investors would argue that it is not their job to look after the public interest
but to look after the long-term interests of their clients and beneficiaries.
If in doing so they happen to act in the public interest as well - great.
72. The Limits of Regulation in Establishing Improved
Governance
Directors’ remuneration
Looking after the public interest is the job of governments and regulators.
• Government intervention to reduce pay could take the form of:
• Wage caps – not generally considered to be politically palatable, limits
on bankers’ bonuses courtesy of the EU being a notable exception
• Reporting and voting requirements – an expectations gap between
what the public thinks should be done and what those requirements
can achieve
73. The Limits of Regulation in Establishing Improved
Governance
One cannot live by regulation alone: be realistic
It is unrealistic to expect that by producing rules and codes intended to
reduce governance failures, such failures can somehow be eliminated
It is inevitable that they will happen
74. The Limits of Regulation in Establishing Improved
Governance
Influencing culture
The human element is the common
thread that links the remaining
governance challenges, whether it be
issues of individual behaviour or
organisational culture. And that is why
some of the tools we have relied on to
make progress to date may be of
limited use.
75. The Limits of Regulation in Establishing Improved
Governance
Culture
Even more than other aspects of governance, culture is specific to
individual organisations. Responsibility for addressing it has to rest with
the board, as it always has.
76. The Limits of Regulation in Establishing Improved
Governance
The role of the regulator in relation to corporate culture
• Prompt boards to pay attention
• Enforce proper penalties
• Make sure there is guidance, case studies or other resources to help
boards think through the issues and apply them to their own
circumstances
77. The Limits of Regulation in Establishing Improved
Governance
One cannot live by regulation alone
A lot has been done over the last twenty years or so using codes and
some regulation to improve governance systems. We have had a lot of
success doing so.
But the need now is to tackle culture and behaviour. We need other tools
for that part of the job. And, while regulators can either help or hinder,
ultimately companies have to go the job themselves.
78. Isle of Man Conference 2016
-Analysing Behavioural Risk
John Hurrell CEO, AirmicWednesday 11th May 2016
79. www.airmic.com
The Association for
those responsible for
risk management and
/ or insurance in their
organisations
1200 members in 450
companies generally
with turnover in excess
of £1bn
Extensive research
programme into risk
related issues
80. www.airmic.com
• The UK Corporate Governance Code 2014 sets out explicit
responsibilities for risk management and internal controls.
• The guidance includes specific reference to risk culture and
assurance – to ensure that an appropriate culture is embedded
throughout the organisation, including embedding risk
considerations into reward systems.
Background
81. www.airmic.com
• Most risk failures are directly or indirectly as a consequence of
inappropriate behaviours.
• Effective risk governance is achieved through the promotion
of effective cultures and behaviours.
Culture and Behaviour – Airmic
research findings
82. www.airmic.com
Roads to Ruin (Cass Business School)
Detailed investigation into the risk management failures at AIG (2005 – 2007),
Arthur Anderson (2001), BP – Texas City (2005), Buncefield (2005), Cadbury
Schweppes (2007), Coca Cola Dasani (2003), EADS Airbus (2006), Enron
(2001), Firestone (2000), HSBC / Nationwide (2006), Zurich (2006),
Independent Insurance (2001), Land of Leather (2008), Maclaren Pushchairs
(2009), Northern Rock (2007), Railtrack (2000-2002), Shell (2004), Soc Gen
(2007), UK PassportAgency (1999).
Lessons from – Ruin vs Resilience
83. www.airmic.com
Roads to Ruin 2011 (Cass)
- Why did companies fail?
• Lack of board skill and NED control
• Board risk blindness
• Leadership failures
• Poor communications
• Organisational and risk complexity
• Inappropriate incentives
• Risk management ‘Glass Ceiling’
Lessons from – Ruin vs Resilience
84. www.airmic.com
Roads to Resilience 2014 (Cranfield)
- Why did companies succeed?
• Exceptional Risk Radar
• Flexible and diverse resources and
assets
• Strong relationships and networks
• Rapid response capability
• Constant review and adaptation
Lessons from – Ruin vs Resilience
85. www.airmic.com
In depth case studies of;
AIG
Drax Power
IHG
JLR
Reviewing
• People and culture
• Business Structure
• Strategy, tactics and operations
• Leadership and governance
ODA
TTP
Virgin Atlantic
Zurich Insurance
Case study research into what does ‘good’ look like - Cranfield Business School 2014
Roads to Resilience
86. www.airmic.com
Risk Radar
• Everyone is responsible
• Constant vigilance
• Complacency engineered out
• Constant questioning and challenge
• Communication critical
Case Study
AIG Vulnerability
Identification Process
87. www.airmic.com
Relationships
• Shared common purpose
• No blame culture – (“fix the problem” culture)
• Flatter Structures
• Engaged leaders
Case Study
Virgin and it’s sub-
contractors
88. www.airmic.com
Rapid Response
• Quick and appropriate action
• Defined processes and teams
• Ability to identify appropriate
resources quickly
• Rehearsing and practising
Case Study
ODA and terrorist
threat
89. www.airmic.com
Diversified Resources
• Actively managed dependencies
• Active networks with ability to switch
rapidly
• Availability of crisis management expertise
Case Study
Virgin ‘Red’ Team
90. www.airmic.com
Review and Adapt
• Active investigation through scenario planning
• Learning is a core value
• Near misses must be communicated
• Active and transparent responses
Case Study
Drax ‘near miss’
voucher
95. www.airmic.com
Black Swans
• Black swans represent 'unknown unknowns'.
• As such, how can you plan for them?
• But our research shows that you do not need to.
• It's not black swans which are the threat!
• It's ..............
96. www.airmic.com
It's Black Elephants!
Our research shows-
• The black elephant was always in the (board) room
• But nobody saw it!
• Or if they did, they chose to ignore it
• But this black elephant had been visible to many
within the organisation
• And obvious to all once the crisis had hit
97. www.airmic.com
Oversight of culture and behaviour
1. Embedded culture
• Who assesses the impact of reward schemes / incentives on the
company’s approach to risk? Is this being managed?
• Does the culture allow people to admit mistakes?Are the lessons well
communicated? Is there a ‘speaking up’ policy?
• Does the board / senior management give a clear lead on risk
management? Is this supported by visible behaviour?
• Are risk related communications open, transparent, honest and
objective?
98. www.airmic.com
2. Information and Communication
• Do board papers and supporting reports allow well
informed board discussions?
• Do board members seek to understand cultural and
behavioural risks?
• Do the board understand risk inherent in the business
model?
Oversight of culture and behaviour
99. www.airmic.com
3. Information and Communication
• Is the desired culture and required behaviour well communicated to
employees and networks?
• Do the board / senior management assess whether these
messages have been understood?
• Are employees and management aware of the need to report any
risk circumstances relating to brand and reputation?
• Is there a ‘Risk Management Glass Ceiling’?
Oversight of culture and behaviour
100. www.airmic.com
4. Accountability
• Do NEDs feel empowered to seek further clarification and
assurance beyond the information in the board pack?
• Are employees empowered to rectify risk related problems which
they identify?
• Are risk agendas for board committees and senior functions
adequately co-ordinated, integrated and cross referenced?
Oversight of culture and behaviour
103. Dennis Tourish
Professor of Leadership
Royal Holloway, University of
London
Co-editor of ‘Leadership’
Email:
Dennis.Tourish@rhul.ac.uk
DYSFUNCTIONAL LEADERSHIP
IN CORPORATIONS
Ken Lay
AKA ‘Kenny Boy’
Jeffrey Skilling
104. Amazon May 2016- 163253 books with ‘Leadership’ in their title.
If you read one every day including weekends it would take you
447 years….
BUT – there are only
346 books with
‘Followership’ in their
title
We have a fixation on
leadership, though
without followers there
are no leaders…
106. SOME ASSUMPTIONS
• Followers should
conform – mostly, do
what they are told
• Leaders know best
(but do they always?)
• Dissent is resistance to
be overcome
Who’s the
boss
BBC 2
March
2016
110. A MAJOR SOURCE
OF ERROR???
‘The temptation to tell a
Chief in a great position
the things he most likes
to hear is one of the
commonest explanations
of mistaken policy. Thus
the outlook of the leader
on whose decision fateful
events depend is usually
far more sanguine than
the brutal facts admit.’
Winston Churchill (1931)
INGRATIATION...
111. ‘A lot of times in politics you have
people look you in the eye and tell
you what's not on their mind.’ --
George W. Bush, Sochi, Russia, April
6, 2008
112. EFFECTS OF FLATTERY
• A study of 451 CEOs looked at the impact on them of more
intense and frequent flattery (e.g., offering exaggerated
compliments) and opinion conformity (e.g., expression of
agreement even when people don't agree).
• Flattery and opinion conformity linked
to CEOs having more favourable
evaluations of their own strategic
judgments and leadership skills, being
less likely to make strategic changes
when firm performance suffered, and
more prone to lead firms that suffered
persistently poor performance.
Hyuan Park, Westphal and Stern, ASQ,
2011
113. EFFECTS OF NARCISSISM
• Highly narcissistic CEOs less responsive to
whether recent firm performance was good or
bad - continued to make equally risky
investments (e.g. acquisitions of new companies)
regardless of recent performance. Their less
narcissistic peers more cautious in bad times and
tended to take bigger risks during good times.
Chatterjee and Hambrick, ASQ, 2011
114. EFFECTS OF NARCISSISM
• Less narcissistic CEO's weren’t affected much by
media praise. The highly narcissistic made riskier
investments after getting praised in the media.
The narcissists were swayed more by "social
praise" and less by recent performance!
• ‘The only benefit of flattery is that by hearing
what we are not, we may be instructed what we
ought to be.’
Jonathan Swift
115. IRRATIONAL BIAS–
ILLUSORY SUPERIORITY
• 69% of drivers consciously worry about being
killed when driving
• Only 1% believe they drive worse than average
• 98% think they are safer than, or as safe, as the
average driver.
Brake (Road Safety Charity) Survey of 800 UK
adults, March 2011
116. ‘Have you ever noticed that anybody
driving slower than you is an idiot, and
anyone going faster than you is a
maniac?’
George Carlin
119. HOW WE TREAT
CRITICAL FEEDBACK
• Subjecting critical
feedback to criticism/
accepting positive
feedback
• ‘I DON’T BELIEVE IT’
• Deny failure
125. WHAT CAN BE DONE?
• Seek out formal and informal
contact with people as often as
possible
126. WHAT CAN BE DONE?
• Scrutinise positive
feedback more rigorously
than negative feedback
• Institutionalise dissent
into the decision-making
process – e.g. promote/
cherish/ reward
contrarians
• Create a culture that
confronts ‘the brutal facts
of reality’ – i.e. where the
truth is heard
127. A CLIMATE WHERE THE
TRUTH IS HEARD
Lead with questions,
not answers
Practice saying:
• ‘I don’t know’
• ‘What do you think?’
• ‘Where have we gone wrong?’
• ‘What could we do better?’
128. A CLIMATE WHERE THE
TRUTH IS HEARD
Engage in debate, not coercion
• Have chaotic meetings
• Loud debate
• Heated discussions
• Healthy conflict
Dennis.Tourish@rhul.ac.uk
129. People with Significant Control
Peter Swabey, FCIS,
Policy & Research Director, ICSA
Isle of Man Conference – 11th May 2016
130. The Small Business, Enterprise and Employment
Act 2015
The Small Business, Enterprise and Employment Act 2015
‘SBEE Act’
A product of the Red Tape Challenge ………
131. The Small Business, Enterprise and Employment
Act 2015
A revised timetable ………….. AGAIN (15)
Full details of the latest timetable can be found on the Companies House
website at :
https://www.gov.uk/government/news/the-small-business-enterprise-and-
employment-bill-is-coming
132. The Small Business, Enterprise and Employment
Act 2015
26 May 2015
Bearer shares were abolished. There is now a legislative timetable in
place and any existing bearer shares must be surrendered by 26 February
2016.
133. The Small Business, Enterprise and Employment
Act 2015
10 October 2015
The day element of the date of birth of directors was hidden from the
public register
The accelerated strike-off process was introduced – down to two months
from three – same with objections. Companies House no longer re-
advertises a Gazette notice once a valid objection has expired
The requirement to give consent to act as a director or secretary has
changed. The company confirms that consent has been given and
Companies House will write to all newly appointed directors.
134. The Small Business, Enterprise and Employment
Act 2015
April 2016 (was December 2015)
The process to rectify the register in the event of director disputes or
registered office disputes will be simplified.
If the director disputes the fact, the company must provide evidence of
consent.
If a registered office address is disputed, Companies House will investigate
and will have power to change the ROA to a default address
135. The Small Business, Enterprise and Employment
Act 2015
6 April 2016
Companies will be required to keep a register of people with significant
control (a PSC Register)
Implementing regulations for companies and LLPs were laid before
Parliament on 25 January, and that these can now be found:
Companies - http://www.legislation.gov.uk/ukdsi/2016/9780111143018
LLPs - http://www.legislation.gov.uk/ukdsi/2016/9780111143025
136. PSC Register: policy
There are five core elements to new Part 21A of the Companies Act 2006
(CA06):
1.The definition of a ‘person with significant control’
2.The legal entities in scope of requirements
3.Obtaining the information
4.The register
5.Disclosure of and access to the information
BIS have replicated or extended existing company law criminal offences to
deal with those who fail to provide information or provide false information.
137. PSC Register: definition
BIS have used the existing definition of ‘beneficial owner’ in the EU anti-money laundering
context as the basis.
New Schedule 1A to the CA06 sets out five ‘specified conditions’. An individual meeting
one or more of these conditions is a Person with Significant Control (‘PSC’):
1. Ownership of more than 25% shares
2. Ownership of more than 25% voting rights
3. Ownership of right to appoint or remove a majority of the board of directors
4. Right to exercise significant influence or control
5. Right to exercise significant influence or control over a trust or firm which trust or firm
would be a PSC, were it an individual)
In certain circumstances a legal entity must be noted in the register (‘relevant legal
entities’ or ‘RLEs’).
138. PSC Register: scope
All UK companies, except companies listed on UK regulated or
prescribed markets, and Limited Liability Partnerships will have to
keep a PSC register.
139. PSC Register: obtaining information
Companies must take reasonable steps to find out if they have any PSCs
or RLEs and identify them.
In some cases the company will already have this information.
In others the company will need to serve notice on individuals and others.
A person in receipt of such a notice is required to reply. Failure to do so is
a criminal offence. Shares may also be subject to restrictions by the
company.
PSCs and RLEs are also required to disclose their interest in the company
to the company in certain circumstances.
140. PSC Register: the company’s register
Companies must hold and keep available for public inspection a PSC register. This will
contain information on the PSCs’:
•Full name
•Service address
•Country or state of usual residence
•Nationality
•Full date of birth
•Usual residential address (not publicly available)
•Date on which PSC obtained control
•The nature of his or her control over the company
Register must be kept up to date as information changes
People may access the register on request.
141. PSC Register: the central register
Companies must provide all the information in their PSC register to
Companies House on incorporation and then at least once every 12
months as part of the new confirmation statement.
All information will be made available on the public register except:
• The full date of birth (only the month and year will be shown on the
public register, except where the company elects to keep its PSC
information solely on the register at Companies House)
• The usual residential address
142. PSC Register: the protection regime
Individuals at serious risk of harm will be able to apply to the registrar of
companies to prevent their information being publicly disclosed on the
company’s register and the central register.
Specified public authorities will have access to protected data on request.
BIS have recently consulted on this regime -
https://www.gov.uk/government/uploads/system/uploads/attachment_data/f
ile/437974/bis-15-315-register-of-people-with-significant-control-
consultation.pdf
Covers the scope, nature and extent of control, fees, the protection regime
and warning and restrictions notices
143. PSC Register: guidance
Two types of guidance:
•Statutory
•Non-statutory
The legislation requires the Secretary of State to publish statutory
guidance, which means that it has legal effect, on the meaning of
‘significance influence or control’ in the context of the PSC register.
144. PSC Register: guidance
Non-statutory guidance has been produced by a working group on behalf
of BIS. This addresses such issues as:
•What is a PSC or an RLE and what do they need to do
•What information is being collected and why
•Who can access it and how
•Which companies are affected and what they need to do
•What ‘reasonable steps’ means
•What to do if you don’t receive the required information
•How to manage your PSC Register
145. PSC Register: guidance
Both sets of guidance can be found :
https://www.gov.uk/government/publications/guidance-to-the-people-with-
significant-control-requirements-for-companies-and-limited-liability-
partnerships
- and on the ICSA website
BIS have also published guidance for PSCs.
146. The Small Business, Enterprise and Employment
Act 2015
30 June 2016
The new ‘check and confirm’ annual confirmation statement will replace
the annual return. Companies will be required to begin filing their PSC
Register information at Companies House. Private companies will also be
able to choose to keep some of their registers at Companies House on
their check and confirm date. The process for disqualifying directors will
be ‘updated and strengthened’ and the statement of capital will be
simplified.
147. The Small Business, Enterprise and Employment
Act 2015
1 October 2016
With specified exceptions, companies will no longer be able to appoint
corporate directors; they will have 12 months to remove any existing
corporate directors that are no longer allowed under the exceptions.
BIS have been consulting on the exceptions to the prohibition of
corporate directors. The implication is that companies will still be
able to use corporate directors for administrative purposes, provided
that all the directors of the corporate director are real people. It would
be prudent to identify situations where your company use corporate
directors and consider how you will comply with the new rules.
148. The Small Business, Enterprise and Employment
Act 2015
Late 2016 / early 2017
Some additional information will be able to be filed at Companies House –
no doubt we will hear more closer to the time.
The UK implementation of the EU’s 4th Money Laundering Directive,
expected in 2017, will have an impact on the filing of PSC Register
information – we await information about the impact of this change.
149. PSC Register: implications for the Isle of Man
Companies must take reasonable steps to find out if they have any PSCs or RLEs
and identify them
Isle of Man shareholders and companies may receive demands for information
• A person in receipt of such a notice is required to reply.
• Failure to do so is a criminal offence.
• Shares may also be subject to restrictions by the company.
PSCs and RLEs are also required to disclose their interest in the company to the
company in certain circumstances.
Will the risk of having to respond to such enquiries and appear on a public register in the UK
cause some investors to seek service providers in other jurisdictions ?
150. PSC Register: implications for the Isle of Man
Risk of regulatory creep
Will the Isle of Man Government and so Isle of Man companies find themselves under
pressure to follow the UK model ?
Will the ‘nominated officer’ model introduced under the Companies (Beneficial
Ownership) Act 2012 be regarded as sufficient ?
• Some concern in Channel Islands
• Increasing use of information-exchange arrangements – UK / IoM Agreement 12th
April 2016
151. PSC Register: implications for the Isle of Man
Information exchange agreement – 12th April 2016
https://www.gov.uk/government/uploads/system/uploads/attachment_data/file/518321/Sharing-beneficial-ownership-information-
exchange-of-information-between-UK-government-and-government-of-Isle-of-Man.pdf
“The arrangement requires establishing and maintaining a central register, or
equivalent system, containing accurate and current information on beneficial ownership
for corporate and legal entities incorporated in their jurisdictions.
It also requires each jurisdiction to ensure effective and unrestricted access to this
information to the other jurisdiction’s law enforcement and tax authorities”.
Target date : June 2017 but will not be a public register