Persons with Significant Control - In The Know

Are you aware of what constitutes having significant control in a company? Many companies are not aware of the requirement to register a person with significant control (PSC) or how it identifies a PSC. In this blog I look into how a person is deemed to have significant control, what you must do when you identify a PSC, and what the consequences are of not registering.

Who can be a PSC?

A person has significant control over a company if, directly or indirectly:

• they hold more than 25% of the shares in the company;
• they hold more than 25% of the voting rights in the company; or
• they hold the right to appoint or remove a majority of the board of directors of the company.

A person may also be a PSC if that person “has the right to exercise, or actually exercises, significant influence or control" over the company. These are known as the qualifications.

So what constitutes ‘significant influence’ and ‘control’?

Significant influence may be where a person can ensure that the company adopts activities which that person desires. Control may be where a person can direct the activities of the company.

As companies may from time to time seek advice on company matters from a lawyer which the company would rely upon, this may be seen as exercising ‘significant influence’ or ‘control’. However, this is one of a number of relationships which, on their own, would not result in that person exercising ‘significant influence’ or ‘control’. Another such excluded relationship may be a supplier acting under a third party commercial agreement.

What are the effects of the PSC rules on your company?

Pre-26 June 2017, the PSC rules were that if there was a change to a company’s PSC register, Companies House would need to be provided with an up-to-date version of the PSC register on an annual basis.

Since 26 June 2017, a strict timeframe now regulates when PSC registers should be updated to Companies House. Now, companies must update their own PSC register within 14 days of becoming aware that a person meets the PSC qualifications. Within a further 14 days, the public register at Companies House must be updated.

Information on the company’s PSC register must be kept up-to-date.

Information you need to register a PSC

Before you can register a PSC on the register, you must confirm the following details with them:

• name and date of birth;
• nationality and country, state or part of the UK where the PSC resides;
• service address and usual residential address (Note: you must not disclose the usual residential address when making the register available for inspection / providing copies of the register);
• the date a PSC became registerable;
• has an application been made for the PSC’s information to be protected from public disclosure; and which PSC qualifications are met.

What penalties are there for failing to register a PSC?

It is important that your company registers PSC at Companies House within the 14-day time frame as you may be subject to a fine or even up to two years’ imprisonment.

For more guidance on PSC requirements, see Gov.uk.

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