One of the most important aspects of ensuring public confidence in the commercial sector is transparency over the ownership of companies.
Not only does this help tackle tax evasion and money laundering, but it also demonstrates to investors (including providers of Foreign Direct Investment (FDR)), and the international community that the UK has laws and regulations in place to prevent white collar crime, corruption and terrorist financing.
Identifying people with significant control over a company is a key part of the British government’s drive to increase corporate transparency. In this article, we explain what a Person with Significant Control is and how to comply with the laws set out in the Companies Act 2006.
What does Person with Significant Control mean?
A Person with Significant Control (PSC) is someone who owns or controls a company. Identifying a PSC is only sometimes straightforward, especially if certain shareholders wish to remain anonymous.
Part 21A and Schedule 1A to the Companies Act 2006 require that companies produce, file, and maintain a dedicated PSC register and retain it at the registered or SAIL address. As part of the incorporation process, details of PSC must be provided to Companies House and any changes to this information must be updated.
What is a PSC register?
Section 790B of the CA 2006 states that a company must maintain a PSC register if it was registered in the UK and falls under one of the following definitions:
- A private company limited by shares or by guarantee
- A public company limited by shares or by guarantee that doesn’t fall within any of the exceptions set out in section 790B(1) of the CA 2006
- An unlimited company
- A Societas Europaea
- An unregistered company
Dormant, Community Interest Companies (CICs), and charitable companies are also required to maintain a PSC register.
Which companies are exempt from maintaining a PSC register?
The following companies don’t need to maintain a PSC register:
- Overseas companies and entities
- Open-ended investment companies
- Charitable incorporated organisations
- Charity trustees incorporated as corporate bodies don’t need to maintain a PSC
If you’ve any doubts about whether or not you need to create and maintain a PSC register, speak to one of our corporate lawyers, who can advise you.
How to find a Person with Significant Control of a company?
In most cases, a PSC is someone who holds:
- More than 25% of shares in the company
- More than 25% of voting rights in the company
- The right to appoint or remove the majority of the board of directors
A person or entity may also have significant control if they:
- Have the right to exercise, or exercises, significant influence or control over the company
- Have the right to exercise significant influence or control over a trust or firm where the trustees or members meet any of the other conditions
By law, if you must register your company’s PSC, you must take ‘reasonable steps’ to identify them, even if this is a complex undertaking.
How to add a Person with Significant Control?
When creating a new company, you must furnish details of the Person with Significant Control in the application form during the registration process.
However, if you formed your company before the implementation of PSC regulations on 6th April 2016, or if you need to register a PSC after incorporation, it’s crucial to submit their information to Companies House as soon as possible. You’ll need to confirm with the PSC the following details before you register them:
- Name
- Date of birth
- Nationality and country of residence
- Correspondence address - known as the ‘service address’
- Home address (this mustn’t be disclosed)
- The date they became a PSC of the company
- The date you entered them into your PSC register
- All natures of control which apply
The level of shares and voting rights within the following categories must also be registered:
- Over 25% up to (and including) 50%
- More than 50% and less than 75%
- 75% or more
What is a Person with Significant Control statement?
A Person with Signicant control statements are set statements that need to be chosen and applied by a company when it can not provide its people with significant control information.
Can a company be a Person with Significant Control?
A relevant legal entity, which can include a company or a trust, can be registered as a Person with Significant Control, provided that it:
- Meets one or more of the specified conditions if it was a person, and
- Is based in the UK
This includes limited and unlimited companies, limited partnerships, limited liability partnerships (LLPs), charities, non-profit organisations, local authorities, government bodies and government departments.
Can a Person with Significant Control remove a director?
A Person with Significant Control has the authority to appoint or remove directors from the board of a company. In certain cases, the governing document, such as the Articles of Association, a Partnership Agreement or a Shareholders Agreement, explicitly outlines the right of the PSC to appoint a majority of the board.
What does the cessation of a Person with Significant control mean?
When an incumbent Person with Significant Control ceases to hold that position, it implies they relinquish their authority over the company entirely.
What if I can’t identify who the Person with Significant Control is?
The PSC register must be filled in. If you can’t identify the PSC, you need to insert the following:
“The company knows or has reasonable cause to believe that there’s a registrable person concerning the company, but it hasn’t identified the registrable person.”
If you haven’t yet confirmed the required details of the PSC (for example, their address), the below statement must be added to the register:
“The company has identified a registrable person concerning the company, but all of the required particulars of that person haven’t been confirmed.”
If investigations are ongoing to find out who the PSC is, insert:
“The company hasn’t yet completed taking reasonable steps to find out if there’s anyone who is a registrable person or a registrable relevant legal entity in relation to the company.”
If, following a thorough investigation, you conclude that no PSC exists, you need to insert the following:
“The company knows or has reasonable cause to believe that there’s no registrable person or registrable relevant legal entity in relation to the company.”
Get legal assistance from LawBite
Understanding the concept of a Person with Significant Control (PSC) is essential for any company operating in the UK. As per the regulations set by the UK government, companies must maintain a register of PSCs and provide accurate information to Companies House. This not only ensures transparency but also helps in preventing money laundering and illegal activities.
If you’re still determining whether your company needs to create a register of PSCs or needs help in identifying PSCs, then speak to one of our corporate lawyers. To find out how LawBite can help you, book a free 15 minute consultation or call us on 020 3808 8314.
