Opinion

Academy trusts – don’t get caught out by new PSC regulations

From 6 April 2016, new company ownership rules came into force, which will affect some academy trusts. Hannah Catchpool explains.

What do the Panama Papers have to do with academy trusts?

The recent media focus on the offshore tax arrangements of the rich and famous may seem far removed from the day-to-day life of a school, but the international drive for greater transparency over company ownership is bringing new, and unexpected, obligations for academy trusts.

From 6 April 2016, new rules came into force which require UK companies to keep a register of individuals or legal entities that have control of them. The persons with significant control (PSC) regulations have their origin in a G8 initiative to increase transparency around company ownership, notably for the benefit of the investment community. However, as charitable companies, academy trusts and their trading subsidiaries are also caught.

Do academy trusts have persons with significant control?

The new regulations set out five conditions by which a person may have significant control over an organisation. One of these conditions covers those who control more than 25 per cent of a company or who control more than 25 per cent of a company’s voting rights.

As academy trusts have no shareholders, the rules therefore apply to the members of the trust. Where there are three members of the trust, they would be deemed to hold more than 25 per cent of the voting rights and would therefore meet the definition of a Person with Significant Control.

Who are the members?

For some academy trusts, the members are likely to include a few chosen governors or perhaps the chairs of committees. Staff trustees, such as the principal or executive headteacher, are not permitted to be members of the trust. As employees they are classed as ‘excepted roles’ and therefore are not PSCs.

What do all academy trusts need to do?

Where academy trusts are caught by the rules, they will need to do the following:

1. IDENTIFY persons with significant control, obtain and confirm their information, if applicable;

2. RECORD the information in a special Persons with Significant Control register;

3. DISCLOSE the information in the annual confirmation statement to Companies House starting from 30 June 2016; and

4. UPDATE the information in your PSC register when there are changes and notify the changes to Companies House on the next confirmation statement.

Corporate sponsors

Complications may arise for academy trusts that are sponsored, as they may have a corporate member as well as individual member. For example if an academy trusts has one corporate member, of three members, the sponsor’s details may need to be put on the register in certain circumstances. Further details of this are available in the guidance and professional advice should be sought.

Trading subsidiaries

Academy trusts may also have a trading subsidiary, and these, as separate legal entities will need to maintain their own PSC register. Provided the trading subsidiary is 100% owned by the academy trusts then the subsidiary’s PSC register will only need to disclose details of the parent academy trust.

Who is responsible for ensuring compliance?

The responsibility will fall to the person within the academy trusts who has company secretarial responsibilities, which for a number of trustwill be the business manager or bursar.

What are the risks of non-compliance?

Arguably, the extension of the PSC requirement to academy trusts is an unintended consequence, but this doesn’t absolve academy trusts from having to comply. Neither does it protect Academies from the financial and other penalties that can apply in case of non-compliance. All academy trusts are therefore advised to take steps to ensure they are not caught out.

Hannah Catchpool is a partner at audit, tax and consulting firm RSM, which specialises in academy trusts.

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