People With Significant Control In A Company

People with significant control (PSC) is a term used to describe an individual who possesses ownership or control over a company. 

People with significant control naturally play an important role in the company, therefore, it’s important to have their correct details documented and regularly updated. This promotes greater transparency within the company – to know who the main individuals are behind it. 

If you’re running a company, keep reading to know more about making sure you are meeting all your PSC-related obligations. 

What Is A Company?

A company is an organisation that generates profit. The business structure of a company makes it a separate legal entity on its own. 

A company has many of the same legal abilities as a person – it can enter into contracts, earn money, accumulate debt and take legal action. Of course, a company cannot do this physically so people are appointed to act on behalf of the company. These people usually hold a position of significant power in the company. 

What Is Companies House?

Companies House is a government agency that is tasked with the responsibility of approving and dissolving limited companies. They also possess and store information relating to companies, making it available for the greater public. 

Companies House promotes and follows corporate legislation, ensuring there is compliance.

Companies Act 2006

The Companies Act 2006 is the primary legislation concerning the regulation of companies. The Act sets out the rules companies need to follow in their practices, covering matters such as: 

• The formation of a company 
• Company constitutions
• Execution of documents
• Company name changes
• Director duties  
• Resolutions and meetings
• Accounts and reports 

People With Significant Control (“PSC”)

People with significant control or a person with significant control (PSC) are those people that have authority regarding how the company operates. Every PSC must be disclosed to Companies House and should meet any one or all of the conditions known as the nature of control. These conditions are: 

• A person who holds more than 25% of shares in the company 
• The right to get rid of or appoint a new director to the company 
• Having more than 25% of voting rights 

There are also circumstances where a person may exercise control over a company in other ways – take a look at the PSC Requirements for Companies in order to ascertain whether any of your company’s members fit this description. 

What Is The PSC Register?

The PSC Register is essentially a record of all the people that qualify as having significant control in the company. The register records their details and the information is to be provided to Companies House. 

The information listed about the PSC includes their: 

• Names
• Date of birth 
• Residence
• Nationality 
• Address (do not make this information publicly accessible) 
• The date they were recognised as a PSC
• The date their PSC status was recorded in the register
• The nature of control criteria that applies to them 

PSC Register Requirements

Not all companies are expected to keep a PSC register. The companies that need to have a register are:

• Private or public companies that are limited by shares
• Unregistered companies
• Unlimited companies
• Companies that are charitable
• Dormant companies
• Community interest companies
• Societas Europaea 

What Counts As ‘Significant Control’?

As we mentioned earlier, those individuals that meet a requirement listed under the ‘nature of control’ count as having significant control. 

People who are considered to have significant control are sometimes referred to as ‘beneficial owners’ of a company as they have a certain amount of shares, voting rights and the ability to appoint or remove directors. If a person satisfies any one of the three elements of nature of control, then they will automatically be regarded as a person with significant control. 

However, if a person does not qualify under the ‘nature of control’, they can still be regarded as a PSC if they have the power to influence the company or the activities of the company. 

In addition to this, a trust or firm that meets one of the specific requirements can also have trustees that are in control of it considered a PSC.

Example Jamie has 15% shares in the company and is also a director. Due to her shares and position, she is able to influence the other shareholders and directors, giving her considerable authority over how the company operates. Jamie is likely to be considered a person with significant control.

Can A Business Be A Person With Significant Control?

Yes, there is no requirement that states a natural person can exclusively be considered a PSC. In fact, businesses and other organisations who meet the elements of having significant control can also be added to the register as a PSC. 

In order for a business or organisation to be considered to have significant control, it must meet the requirements of being relevant and registerable. In other words, they must be considered a relevant legal entity. 

What Is A Relevant Legal Entity?

A relevant legal entity is an organisation that is:

• Able to meet any one of the requirements under the nature of control 
• They also need to keep a PSC register for their company 

Example Tom’s construction company has purchased 30% shares in a timber company. As a result of this, Tom’s company can be considered a relevant legal entity and be listed as a PSC as they meet one of the nature of control requirements and are also required to have a PSC themselves.

Can Overseas Companies Be On The PSC Register?

Yes, an overseas company can be on the PSC register. 

While overseas-based companies most likely do not need to comply with keeping a PSC register if they don’t need to, they can be on the PSC register of another UK-based company. 

Once again, this is permitted only if they satisfy the requirements of being considered a relevant legal entity with enough power and influence within the company in question. 

How Do I Update The PSC Register?

The PSC register needs to be updated internally, within your own company first by changing any relevant details. It’s important to do this within 14 days of the change occurring and then, altering Companies House of these changes within another 14 days. 

This can be done online.  

What Happens If I Don’t List PSC?

Listing a PSC is a requirement under the Companies Act 2006. Not doing so is considered a criminal offence and could lead to consequences for your company, so it’s important to be on top of this. 

The primary purpose of having a PSC register is to promote greater transparency and accountability, particularly when it comes to the larger companies. In order for this to work, it’s essential to be compliant with all the relevant requirements. 

Key Takeaways

Making sure all the people with significant control in your company can be identified is an important aspect of being a legally compliant company. 

To summarise what we’ve discussed: 

• A person with significant control is someone who meets one or more of the requirements under the ‘nature of control’ or who otherwise exercises a considerable amount of influence within the company 
• The PSC register is an internal document of the company of which Companies House must be notified 
• Not all companies are required to have a PSC
• Businesses, both local and foreign can also be a PSC as long as they are a relevant legal entity 
• The PSC register and Companies House needs to be updated of any changes, within 14 days of the change occurring 
• It’s a legal requirement to comply with PSC obligations 

If you would like a consultation on people with significant control, you can reach us at 08081347754 or [email protected] for a free, no-obligations chat.

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