Table of Contents
A relevant legal entity (RLE) is a corporate body, like a limited company, that would qualify as a person with significant control (PSC) of another company if it were an individual. Essentially, it is a corporate PSC.
If a corporate entity has any level of ownership or control in your firm, you will need to determine whether they qualify as a registrable relevant legal entity in relation to your organisation.
In this blog, we take a look at the qualifying criteria below and the steps you need to take when you identify any RLE. This includes recording their details in your PSC register, notifying Companies House, and keeping information about registrable RLEs up to date.
Identifying relevant legal entities
The requirement to identify and record details of people with significant control (PSCs) applies to all UK companies, limited liability partnerships (LLPs), Societates Europaeae (SEs), UK Societas, and eligible Scottish partnerships (ESPs).
Most PSCs are individuals, but it is not unusual for corporate bodies (e.g. companies or LLPs) to also own or control other companies. An example of this would be a parent company that owns and controls a subsidiary.
In such instances, the corporate body would be classed as a relevant legal entity (RLE) if it would qualify as a PSC if it were an individual.
A legal entity is considered relevant in relation to another company if it meets at least one of the qualifying conditions to be a PSC and:
- keeps its own PSC register, or is an ESP and provides information on its PSCs to the central register at Companies House; or
- has voting shares admitted to trading on a regulated market in the UK or European Economic Area (other than the UK) or on specified markets in Switzerland, the USA, Japan, and Israel
The qualifying conditions to be a PSC are:
- holding more than 25% of the company’s shares
- holding more than 25% of the company’s voting rights
- having the power to appoint or remove a majority of the company’s board of directors
- exercising, or having the right to exercise, significant influence or control over the company
- exercising, or having the right to exercise, significant influence or control over a trust or a firm that is not a legal entity that itself satisfies any of the first four conditions
Once identified, a relevant legal entity is registrable in relation to a company if it is the first RLE in the company’s chain of ownership – i.e. it doesn’t hold indirect interests in the company through one or more other RLEs.
Recording relevant legal entity details in the PSC register
Within 14 days of identifying any registrable RLEs, a company must obtain and record the following information about the corporate entity in its PSC register:
- official name
- the principal or registered office address
- legal form (e.g. limited company)
- law by which it is governed (e.g. Companies Act 2006)
- register in which it appears, including the country or state where the register is held
- registration number
- the date on which it became registrable in relation to the company
- which of the five qualifying PSC conditions it meets, including quantification of its interest or control, where relevant, e.g. ownership of more than 75% of shares
Most companies keep their PSC register at their registered office address, making it available for inspection upon request. However, you can also keep a PSC register at a single alternative inspection location (SAIL address) or elect to keep this information available for inspection at Companies House instead.
The need to keep a PSC register only applies to companies, LLPs, SEs, and UK Societas. Eligible Scottish partnerships do not have to keep their own register, but they still need to provide PSC information to Companies House.
Providing RLE information to Companies House
Within 14 days of obtaining and entering an RLE’s details in the PSC register, you must provide the same information to Companies House.
There is no need to confirm the RLE’s details prior to sending the information to Companies House. This requirement to confirm only applies to the details of individual PSCs.
To tell Companies House about an RLE, you will need to complete form PSC02 ‘Notice of relevant legal entity (RLE) with significant control’.
You can file the form in one of three ways:
- online using Rapid Formations free Online Client Portal
- online via Companies House WebFiling service
- by printing form PSC02 and sending it to Companies House by post
Online filing is the quickest, easiest, and most secure way to deliver this information. In most cases, Companies House will process the form and enter the RLE’s details on the central public register within 48 hours.
The requirement to file PSC and RLE information at Companies House applies to all UK companies, LLPs, SEs, UK Societas, and ESPs.
GOV.UK provides detailed PSC guidance for each type of corporate entity.
Updating the details of a registrable RLE
If the details of a registrable RLE change at any time, you must update the information in your company’s PSC register within 14 days of the change.
Within a further 14 days, you must report the change of details to Companies House using form PSC05 ‘Give notice of change of details for relevant legal entity with significant control’.
You can deliver this form online via Rapid Formations free Online Client Portal or Companies House WebFiling. Alternatively, you can send it by post.
Companies House will update the RLE’s information on the central public register within approximately 48 hours of receiving the form.
If a corporate entity stops being a relevant legal entity
If a corporate entity ceases to be an RLE in relation to your company, you must tell Companies House using form PSC07 ‘Notice of ceasing to be an individual person with significant control (PSC), relevant legal entity (RLE), or other registrable person (ORP)’.
To complete this form, you will need to enter the following details:
- name and registration number of your company
- name of the relevant legal entity as it appears on the central public register
- the date on which the entity ceased to be an RLE in relation to your company
- the date on which you made this update to your company’s PSC register
If you file this form online, Companies House will update the public register accordingly within approximately 48 hours.
Confirming RLE details on the confirmation statement
Every year, you must confirm that the RLE details held at Companies House and displayed on the central public register are correct. You will do this by filing a confirmation statement.
If any information about your RLEs or other PSCs is out of date, you will need to update the details at Companies House before filing the confirmation statement. You must also ensure that this information is accurately reflected in your company’s own PSC register.
By definition, a person with significant control (PSC) is a natural individual – a ‘person’, but it’s not uncommon for corporate entities to own and control other companies.
In such instances, these corporate bodies may be classed as registrable relevant legal entities if they satisfy certain conditions.
After reading this post, you should now have a better understanding of the qualifying criteria to be classed as a registrable RLE and the steps you need to take when you identify an RLE in relation to your company.
This includes recording their details in your own PSC register, providing this information to Companies House, and keeping details of registrable RLEs up to date.
If you have any questions about this topic, please leave a comment below or contact our company formation team.