The client sought advice regarding her obligations to register herself as a Person with Significant Control (“PSC”) in relation to her companies and the potential consequences of doing so due to previous issues with banking institutions.
The client is a British citizen and Iranian national who has operated a number of logistics and freight businesses. She previously worked in the aviation industry before establishing logistics companies and developing international freight businesses.
The client was involved in establishing various companies, including a logistics company which provided international freight services. She later diversified into logistics operations involving Chinese businesses, providing freight forwarding and customs clearance services for goods supplied to online retailers.
The client became concerned about PSC registration requirements after becoming aware that individuals with significant control over companies are required to be disclosed to Companies House. The client explained that she had historically operated some businesses using nominee directors due to difficulties opening and maintaining business bank accounts.
The client stated that she had previously been mistakenly placed on a United States sanctions list in 2013 due to an association with a former business associate. The client explained that, following legal intervention and assistance from her Member of Parliament, her name was removed from the sanctions list. However, she stated that the previous sanctions history continued to affect her ability to obtain banking facilities.
The client explained that banks had refused to open accounts for her businesses, relying on internal risk assessments and stating that they were unable to provide specific reasons for refusing banking services. The client believed these decisions were connected to her previous inclusion on the sanctions list.
Due to these banking difficulties, the client stated that she had established businesses using nominee names to avoid disruption to business operations. She was concerned that declaring herself as PSC could result in banks closing existing accounts, which could cause significant financial difficulties due to existing employees, leases and business liabilities.
The client was concerned that failing to register herself as PSC would place her in breach of the Companies Act 2006 and sought advice on whether there was a lawful method of operating her businesses without exposing herself to banking risks or regulatory breaches.
The client also provided background regarding her association with a former business colleague who later became involved in an aircraft transaction which resulted in allegations relating to sanctions and terrorism financing. Due to this association, the client stated that she was incorrectly included on a US sanctions list.
Following her removal from the sanctions list, the client stated that her banking difficulties continued. She explained that her accounts were closed and that she was unable to obtain replacement banking facilities despite assistance from her MP.
In 2020, the client’s nominee director was subject to a police investigation involving allegations of money laundering and other criminal activity connected with her business operations. The client denied any wrongdoing and maintained that the allegations were unfounded. During subsequent police interviews, the client was informed of potential issues concerning PSC registration.
The primary issue was whether the client was legally required to register herself as a PSC in relation to her companies and whether there were lawful alternatives which would prevent disclosure of her identity.
Counsel considered the provisions of the Companies Act 2006 relating to PSC registration obligations. A person is required to be registered as a PSC where they meet one or more statutory conditions, including holding more than 25% of shares, holding more than 25% of voting rights, having the right to appoint or remove directors, or exercising significant influence or control over the company.
Counsel considered whether the client could avoid personal registration through the use of a Relevant Legal Entity (“RLE”) structure. However, this would depend on whether another legal entity within the ownership structure met the requirements of an RLE and was itself subject to disclosure requirements.
The issue was considered that the use of nominee directors or arrangements designed to conceal the true controller of a company could create further regulatory issues if the client was in fact exercising significant control over the businesses.
Counsel considered the potential consequences of failing to comply with PSC obligations under the Companies Act 2006, including criminal sanctions for companies and officers who fail to comply with statutory duties relating to PSC disclosure.
A further issue concerned the client’s allegations that banks had refused banking facilities due to her previous sanction’s history. Counsel considered whether any legal remedies were available against banking institutions, including whether the refusals could amount to unlawful discrimination. Counsel advised that banks are generally private entities and may refuse services based on legitimate risk assessments, provided such decisions are not based on unlawful discriminatory grounds.
Counsel also considered whether the client could seek court intervention, including whether a Part 8 claim against the Registrar of Companies could provide a mechanism to challenge PSC disclosure requirements. However, further research was required.
The potential involvement of human rights issues was also considered, particularly concerning the impact of regulatory disclosure requirements on the client’s ability to operate her businesses.
Counsel advised that the client was likely required to comply with PSC registration requirements if she met the statutory definition of a person with significant control. The client’s personal circumstances, including her previous removal from a sanctions list, would not automatically remove the obligation to disclose her status as PSC.
Counsel advised that the client should not continue operating businesses using nominee arrangements if those arrangements were intended to conceal her true ownership or control, as this could create further compliance issues.
Counsel explained that the Companies Act 2006 imposes duties on companies to identify registrable PSCs and maintain accurate PSC information. Failure to comply may result in offences being committed by both the company and officers responsible for compliance.
Counsel advised that further investigation was required into whether any legitimate corporate structure could be used, including whether a Relevant Legal Entity could properly sit within the ownership structure and satisfy the statutory disclosure requirements.
Counsel advised that the client should gather evidence regarding the refusal of banking services, including correspondence from banks, account closure notices and any documentation showing that decisions were linked to her previous sanctions history.
Counsel advised that banks are generally entitled to conduct their own risk assessments and that an application against a bank would require evidence of unlawful discrimination or other unlawful conduct rather than simply a refusal of banking facilities.
Counsel advised that further research should be undertaken regarding whether a legal challenge could be brought concerning PSC disclosure requirements, potentially involving public law or human rights considerations.
The client was advised that she should disclose her PSC status within the required timeframe to avoid potential breaches of the Companies Act 2006 while further advice was obtained.
Overall, Counsel advised that the client’s priority should be achieving compliance with PSC regulations while exploring lawful methods of protecting her businesses from disruption caused by banking restrictions. Further specialist advice may be required in relation to public law, sanctions and human rights issues.
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