What is a “Person with Significant Control” (PSC)?

• Posted onMarch 9, 2022

Who is the person with significant control? Are we required to keep a PSC register? How do I know who the PSC is?

Chloe Perez is a Trainee Solicitor in WSP Solicitors’ Corporate Commercial Law Department, based in Gloucester. Read on for her guide on persons with significant control (PSC).

What is a Person with Significant Control?

A person with significant control (PSC) is an individual, company or other entity who owns or controls your company. They are sometimes called ‘beneficial owners’. They have the right to exert significant influence, or control, over the business and management of a limited company or LLP.

The requirement for a PSC register was introduced in the Small Business, Enterprise and Employment Act 2015, which inserted on 6 April 2016 a Part 21A and Schedule 1A into the Companies Act 2006.

This formed part of the Government’s plans to enhance corporate transparency of the beneficial ownership and control of UK companies. This has allowed those who benefit financially from a company to be more readily identified, facilitate economic growth and help tackle misuse of companies.

Is my Company required to keep a PSC register?

Below is a basic guide of what type of company has to keep a PSC register:

Companies required to keep a PSC register

• Private company limited by shares or by guarantee
• Public company limited by shares or by guarantee that does not fall within any of the exceptions set out in s790B(1) of Companies Act 2006
• Unlimited company
• Societas Europaea
• An unregistered company
• Any such company that is a dormant company, community interest company and a charitable company

Not required to keep a PSC register

• Open-ended investment company
• Overseas company, as defined by S1044 CA 2006
• Any other overseas entity
• Co-operative, community benefit and friendly societies
• Charitable incorporated organisations
• Charity trustees incorporated as a body corporate

How do I know who the person with significant control is?

A company subject to part 21A of the Companies Act 2006 must take reasonable steps to determine if there is anyone who is a registerable person in relation to that company and if so, identify them in the PSC register.

A person is a PSC if they meet one or more of the five specified conditions (s790 c (2)):

Condition 1 – directly or indirectly holds more than 25% of shares.

Condition 2 – directly or indirectly holds more than 25% of the voting rights.

Condition 3 – directly or indirectly holds the right to appoint or remove a majority of directors.

Condition 4 – otherwise has the right to exercise significant influence and control.

Condition 5 – having the right to exercise or actually exercises significant influence or control over the activities of a trust or firm which is not a legal entity but would satisfy any 1 of the first 4 conditions if they were an individual.

Although the individual only needs to meet one of the specified conditions, the company must test an individual’s interest in shares or rights against each of the specified conditions. The PSC register must reflect both the extent of a person’s control over the company and the nature of the control, by explaining which specified conditions are met.

It is often the case that a corporate shareholder is the PSC of a company. In this case the corporate shareholder would be known as a ‘relevant legal entity’ (RLE) and must be dealt with in largely the same way as an individual PSC.

Part 21A of the Companies Act 2006 requires a company to identify a RLE that would meet one or more of the specified conditions if it was an individual and if that entity itself is required to keep its own PSC register. If not, the subsidiary company will need to look further up the ownership chain to identify any registerable PSC or RLE.

Where do I look for information on the person with significant control?

A company must take reasonable steps to find out if there is anyone who is a registerable person or a registerable RLE in relation to the company, and if so, to identify them.

The department for Business, Energy & Industrial Strategy published guidance in June 2017 which includes examples of action a company might take towards satisfying the reasonable steps obligation. A company should do what it thinks a reasonable person would do if that person had the information that was available to the company. In particular, the company should:

1. Consider all documents and information available to it;
2. Consider interests held not only by individuals and legal entities, but also by trusts and firms that do not have legal personality;
3. Consider every interest in light of the additional rules of interpretation in Part 3 of Schedule 1A of the Companies Act 2006; and
4. Investigate leads in respect of potential direct or indirect interests in the company.

Here are some examples of what to consider when determining who the PSC or RLE is under the 5 conditions:

Condition 1 – Register of members, articles of association and statement of capital.

Condition 2 – Register of members, articles of association, shareholders’ and other agreements, consider voting patterns.

Condition 3 – Relevant provisions of the articles of association, other covenants or agreements which concern the appointment or removal of directors holding the majority of votes at board level.

Condition 4 – Have regard to the statutory guidance for companies.

Condition 5 – Have regard to the statutory guidance for companies.

What do I do now I know who the PSC is?

Once you have identified the PSC, you must consider the extent of each such person’s interest in the company. Companies House requires the particulars of each person with significant control and requires a statement of the nature of their interest. However, where a registerable person is an individual, those details must not be entered into the register until all required particulars have been confirmed.

The required particulars for a registerable PSC include:

1. The individual’s name and date of birth;
2. Nationality;
3. An address for service and a usual residential address;
4. The date on which the individual become a registerable PSC in relation to the company;
5. Which of the five conditions for being a PSC the individual meets, with quantification of the interest where relevant. Where a PSC meets one or more of conditions (1) to (3) the company is not required to identify whether they also meet condition 4.

The required particulars for a registerable RLE include:

1. The name of the legal entity;
2. The registered or principal office;
3. The entity’s legal form and governing law;
4. The date on which it became a RLE to the company; and
5. Which one of the 5 conditions for being a PSC it meets, with quantification of its interest where relevant.

This information should be submitted to Companies House using either form PSC01 or via Companies House Web filing, within 14 days after the day that all of the required particulars have been confirmed.

Required particulars in respect of a registerable PSC are considered to be confirmed if:

1. The person supplied them or confirmed them to the company;
2. Another person did so but with that person’s knowledge; or
3. They were included in a statement of initial significant control delivered to the registrar under s9 of the CA 2006 by subscribers wishing to form the company.

With the exception of residential addresses, this information will be publicly available via the Companies House website.

What if my Company doesn’t have a person with significant control or I don’t know how to find out?

A company’s PSC register can never be blank. If a company is not in a position to complete its register on that date, it must include official wording in the register to reflect the progress of the company’s investigations, as follows:

Where the company has not yet identified someone it reasonably believes to be registerable (Regulation 11, PSC Regulations):

“The company knows or has reasonable cause to believe that there is a registerable person in relation to the company but it has not identified the registerable person.”

Where the company has not yet confirmed the required particulars of a registerable PSC (Regulation 12, PSC Regulations):

“The company has identified a registerable person in relation to the company but all of the required particulars of that person have not been confirmed.”

Where the company has not otherwise completed its investigations (Regulation 13, PSC Regulations):

“The company has not yet completed taking reasonable steps to find out if there is anyone who is a registerable person or registerable legal entity in relation to the company.”

If a company has completed its investigations and concluded that no individual or legal entity is registerable by that company (Regulation 10, PSC Regulations):

“The company knows or has reasonable cause to believe that there is no registerable person or registerable relevant legal entity in relation to the company.”

Do I need to maintain my PSC register?

Companies are required to keep the information of their PSC register up to date and failure of this could result in criminal sanctions against the directors of the company, most notably a fine or a prison sentence (or both).

Any information that is no longer correct must be updated within 14 days of the company becoming aware of the change. With any changes being made to your company, such as a transfer of shares, you will need to consider if this will have an effect on your PSC register.

How can WSP Solicitors Corporate Commercial Law team help?

WSP Solicitors offers a full range of Commercial legal services, including assistance with PSC’s. If you have any queries on the PSC regime for your company or wish to ensure that you are fully compliant with all requirements, please get in touch today. You can contact us using the form found here or on this page. Alternatively you can call us on 01453 847200