Person(s) of Significant Control

Person(s) of Significant Control

A Person of Significant Control (PSC) is anyone that exerts a significant influence or control over a company. They are identified as a PSC if they meet any of the following criteria:

• Hold more than 25% of a share in a company or have the right to participate in more than 25% of the surplus assets of an LLP
• Hold more than 25% of the voting rights in a company or LLP
• Has the right to appoint or remove the majority of the directors/management of a company or LLP
• Has the right to exert or is exerting a significant influence or control over a company or LLP
• Has significant influence or control over a Trust or Firm that meets any of the above criteria

Points 1 to 3

There is one exception to points 1 and 2. If the shareholder in question is a nominee that is holding the shares on behalf of another person then the nominee is seen as 'transparent'. This means that the nominee shareholder is not seen as the PSC, but rather the ultimate beneficial owner is.

Point 3 applies to a shareholder that controls more than 50% of the voting right. This means they can appoint or remove directors from the board. There may be a governing document, such as the Articles of Association, a Partnership Agreement or a Shareholders Agreement, which could explicitly state that a specific individual has the right to appoint a majority of the board.

Points 4 and 5

These two points are more subjective. You can read the statutory guidance, but we'll give you the low down here.

You're looking for anyone who can dictate the actions of the directors or shareholders. Here are some examples from the referenced guidance

A person would exercise significant influence or control if: a) They are significantly involved in the management and direction of the company, for example: A person, who is not a member of the board of directors, but regularly or consistently directs or influences a significant section of the board, or is regularly consulted on board decisions and whose views influence decisions made by the board. This would include a person who falls within the definition of shadow director set out in section 251 of the Act, but the situation is not confined to shadow directors. b) Their recommendations are always or almost always followed by shareholders who hold the majority of the voting rights in the company, when they are deciding how to vote. For example: A company founder who no longer has a significant shareholding in the company they started, but makes recommendations to the other shareholders on how to vote and those recommendations are always or almost always followed.

There are exclusions which include professional advisors, such as accountants and solicitors. Directors are also not considered PSCs as they already have a director's status noted by Companies House.

If a corporate entity meets any of the above points, they must be listed as PSCs.

Corporate Entities

In some cases, a corporate entity may meet the criteria of being a PSC. However, it is more complicated than dealing with PSCs that are individuals.

If the corporate entity is registered in a district that has a central registry of PSCs available to the public, then you can submit that entity as a Relevant Registrable Legal Entity (RLE) - essentially the corporate equivalent of a PSC. This is because the public can access the public register and find out who the ultimate controllers of the company are.

If the corporate entity is registered in a district that does not have a central registry of PSCs available (i.e. not in the UK), then you'll have to figure out who the PSCs are. This means you'll have to work through the corporate chain to see who is in control and then see if they meet the PSC criteria stated above.

You might find that there are complicated ownership structures with several shareholders. In this case, you have to find out who controls each company in the corporate chain. For example, if the 30% shareholder of a UK company was a German company that was owned in a 51:49 split between two people, the 51% owner of the German company would be seen as a PSC of the UK company.

If you do the math, you might be confused. They don't appear to be a PSC because 51% x 30% = 15.3% which is below the 25% share that makes them a PSC of the UK company. Here's the catch, because they control the majority of the German company, they have control over the entire 30% share in the UK company.

Joint shareholders and trusts

If one of your shareholders owning over 25% is a joint shareholder, they are both seen as a PSC as though cothey each have entire control of that share. For example, two people have a joint share of 40%. They are both seen to control that 40% as opposed to both of them having 20% each.

The same normally applies to trusts. Trustees are PSCs if the trust meets the criteria of being a PSC.

Other legal entities

We've looked at individuals, RLEs, joint shareholders and trusts as PSCs, but there are other legal entities we haven’t covered yet. They are known as Other Registrable Persons (ORPs).

The guidance provides a non-exhaustive list for ORPs. Here are some examples:

7.4.10 The law makes special provision where a company is owned or controlled by an 'other registrable person' such as: * A government or government department (local or national); * An international organisation whose members include two or more countries, territories or their governments; or * A corporation sole (a legal entity consisting of a single incorporated office occupied by a single person)

Shareholders acting as a unit

Another scenario may be when shareholders vote the same way giving them greater control. This is often seen in family groups. You might identify the leader of this group as a PSC or, if each individual of the group has joint control over 25% of share or votes, you can treat them the same way you would treat a joint shareholder.

What Information do you have to give?

You've identified your PSCs and now you need to submit their information. Below are the details required for each type of PSC:

An individual

• Full name
• Date of birth
• Nationality
• County, state or part of the UK where the PSC usually lives
• Service address
• Usual residential address

RLEs

• Name of legal entity
• The address of its registered or principal office
• The legal form of the entity and the law by which it is governed
• If applicable, a register in which it appears (including details of the state) and its registrations number

ORPs

• Name
• Principal office
• The legal form of the entity and the law by which it is governed

You will also need to supply the date they became a PSC of your company and the nature of their control (refer to points 1 to 5 mentioned previously).

If your PSC falls into points 1 to 3, you'll need to classify what percentage of shares of voting rights they control. Use the classifications below:

• More than 25% and less than 50%
• More than 50% and less than 75%
• More than 75% and less than 100%

If your PSC is a firm or trust, you'll need to inform Companies House.

You will need to provide your PSC information to Companies House when registering your company and within 14 days of any change. A change could be to add or remove a notification of a PSC, or to change the personal details of an existing PSC.