The UK government passed the legislation creating People With Significant Control requirements in 2016. The Regulation sets out in precise detail how to determine if you are or are not a Person with Significant Control.
The reason that the government introduced the People with Significant Control requirements is to bring greater transparency to UK registered companies. The government’s main aim is to make sure they know who is running UK companies.
That enables much easier regulation, and the ability to reach people in the event that something goes wrong with the company. In addition, the government wants to prevent limited companies and other corporate bodies from being used for bad purposes such as money laundering.
What is a person with significant control (PSC)?
In basic terms, if an individual can alter what the company does, how the company does it and when the company does something, then that individual is a Person with Significant Control.
A Person With Significant Control is an individual who has influence over the company. A Person With Significant Control may or may not own many shares in the company, they may or may not be directors.
A Person With Significant Control is often referred to as a PSC. When you form a company you will need to identify a Person or Persons With Significant Control. For most small and new companies, Directors and Shareholders are automatically Persons With Significant Control because they own more that 25% of the company.
So, who is a person with significant control?
To break it down even more there are main five conditions that will result in a PSC qualification. If a person within your company meets any of the below conditions, then they will be classed as a PSC and need to be added to your registry.
The first three conditions are pretty straightforward. They are:
- someone who has more than 25% of shares in the company
- someone who has more than 25% of voting rights in the company
- someone who has the right to appoint or remove the majority of the board of directors
The final two conditions are slightly more complicated. They are:
- someone who has significant control or influence through other means
- a trust or firm which controls the company
For example, if you are a one-person company, then you will own 100% of the company. In that case, you are automatically a Person with Significant Control. The same logic applies if you are 2 people who own the company 50/50. You are both considered Persons With Significant Control.
When you are forming a company with MachFast.com the app will quickly ask you to confirm whether you, as a Director or Shareholder of the company, are a Person With Significant Control. Often, if you use other means to form a company you will have to fill out additional forms and or answer many more questions to complete the PSC information.
What is ‘significant control or influence’?
In some cases, there may be a person who doesn’t fit any of the above conditions but who still directs activity within your business. The government will still class this individual as a PSC, and it will be best to add them to your register.
So, ‘significant control or influence’ is a pretty ambiguous phrase. Thankfully, Companies House has provided a list of examples detailing what this actually means here.
The key examples from that link can be found below:
- Direct the activities of the business
- Have the right to veto decisions related to the running of the business
- Are a company founder who no longer has significant shares in the business but can still make recommendations
- Regularly direct or influence a considerable section of the board, despite not being a board member themselves
- Have the right to appoint or remove a CEO
Does a trust or firm control your company?
If a trust or a different firm can influencer or control your business in the examples highlighted above, any person who controls that trust or firm will need to be added to your PSC register.
This is an area that can get pretty complex. So we, as well as the government would recommend that you get professional advice if you think you fall into this category.
How to identify people with signifant control
Companies House put together a very helpful video that explains People With Significant Control requirements.
Person with significant control FAQs
What is a PSC person with significant control?
A Person of Significant Control (PSC) is anyone that exerts a significant influence or control over a company.
Is a director a person with significant control?
Certain conditions need to be met for a person or director to be considered a person with significant control (PSC)
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