What is a person with significant control? What is a person with significant control?

What is a person with significant control?

In corporate governance and compliance, understanding the concept of a person with significant control (PSC) is fundamental for any company, especially in the UK. This term carries significant legal implications and is critical to maintaining transparency in business operations.

What does a person with significant control mean?

A person with significant control is someone with significant influence or control over a company. This is not limited to ownership; it also encompasses individuals who have the power to influence or direct the company’s decisions, even without holding a majority of the voting rights. The UK government introduced the concept to enhance corporate transparency and prevent the misuse of corporate entities for illicit purposes.

A person with significant control doesn’t just hold a position of authority, but also has the potential to shape the company’s strategic direction. This influence can manifest in various ways, such as through financial investments, business relationships, or even family ties that grant them substantial sway over company decisions. Understanding the nuances of significant control is crucial for accurately identifying a PSC.

Do I need to register a person with significant control?

Yes, it is legally required in the UK to register individuals who qualify as PSCs with Companies House. This is part of the UK’s commitment to corporate transparency and combating financial crimes like money laundering. Failure to register a PSC or provide accurate information can result in significant penalties for the company.

Who can be a person with significant control?

A PSC can be:

  1. An individual with more than 25% of shares or voting rights in a company.
  2. An individual who has the right to appoint or remove the majority of the board of directors.
  3. Someone with the right to, or exercises, significant influence or control over the company.

Additionally, a PSC could be a trust or firm meeting specific conditions under UK law. In such cases, the trustees or members who have significant control over the activities of that trust or firm could be considered PSCs. It’s also important to consider situations where control is exerted indirectly. For example, an individual who controls a company that holds a significant share in another company can also be considered a PSC of the latter.

Is a director a person with significant control?

Not necessarily. Being a director of a company only automatically makes someone a PSC if they meet the specific criteria for significant control or influence. The level of control or influence determines PSC status, not just the title or position held within the company.

To clarify, while executive directors with substantial shareholdings or voting rights might be PSCs, non-executive directors or those without such rights typically do not qualify. The combination of their role and their control or influence needs consideration. For instance, a director with veto powers over significant business decisions could be deemed a PSC, regardless of their shareholding.

Can I have more than one person with significant control?

Yes, a company can have multiple PSCs. It is common in larger companies where several individuals meet significant control or influence criteria.

What information is needed to register a person with significant control?

To register a PSC, you need to provide:

  • Name and contact details
  • Date of birth
  • Nationality
  • Residential address (kept private) and service address
  • The date they became a PSC in your company
  • The nature of their control over the company

The process also involves detailing the extent and nature of control. This includes specifying whether the PSC directly or indirectly holds shares or voting rights and whether their control is through ownership, voting rights, or other means like contractual agreements. It is also essential to update this information regularly, especially when there are changes in the company’s ownership structure or control dynamics.

How to register a person with significant control

Registering a person with significant control involves:

  1. Identifying the PSC: Determine who in your company meets the criteria.
  2. Gathering information: Collect the required details of the PSC.
  3. Filing with Companies House: Submit the information through the Companies House online service or via post.

Registering a PSC should be thorough and accurate to avoid legal complications. It is advisable to have legal counsel or a corporate compliance expert review the information before submission. This can ensure compliance with the nuanced aspects of UK corporate law and mitigate potential risks associated with incorrect filings.

How to remove a person with significant control

To remove a person with significant control:

  1. Determine the reason: Understand why the individual no longer meets the PSC criteria.
  2. Update records: Amend your company’s PSC register.
  3. Notify Companies House: File the changes with Companies House promptly.

Removing a PSC is as crucial as registering one and should reflect the change in control or influence within the company. If the change is due to selling shares, ending an agreement that conferred control, or other similar reasons, such details should be accurately captured in the company’s PSC register and communicated to Companies House. This transparency is vital to maintaining the integrity of the public record.

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