Person of Significant Control

The PSC Regulations 2016 apply to UK incorporated companies limited by shares, companies limited by guarantee (including community interest companies) and societas europaea (SEs). Limited liability partnerships (LLPs) will also be subject to the requirements following the implementation of secondary legislation.

Companies are required to:

• take reasonable steps to find out if there are people that have significant control or influence over the company;
• contact these people, or others who might know them, to confirm they meet one or more of the conditions and get the relevant information – NB PSCs, or anyone who might know about a PSC, must respond to the requests for information. They are subject to requirements too;
• put the information on the company's own PSC register;
• file the information at Companies House to be made available on the central public register;
• keep the information up to date.

People with Significant Control (PSC)

A PSC is an individual who meets one or more of the following conditions in relation to the company;

• Directly or indirectly owning more than 25% of the shares
• Directly or indirectly holding more than 25% of the voting rights
• Directly or indirectly holding the right to appoint or remove the majority of directors
• Otherwise having the right to exercise, or actually exercising, significant influence or control
• Holding the right to exercise, or actually exercising, significant influence or control over the activities of a trust or firm which is not a legal entity, but would itself satisfy any of the first four conditions if it were an individual.

If any of the first three conditions are met, then you do not need to worry about 4 or 5.

Where you have identified a PSC, you need to obtain, confirm and then enter the following details on the PSC register about the PSC:

• Name
• Date of birth
• Nationality
• Country, state or part of the UK where the PSC usually lives
• Usual residential address
• Service address (if different to the residential address)
• The date the individual became a PSC
• Which of the five conditions for being a PSC the individual meets
• Any restrictions on disclosing the PSC's information

Relevant Legal Entity (RLE) (PSC)

A PSC is by definition an individual, and not a legal entity. But the company might be owned or controlled by a legal entity, not an individual. A legal entity must be put on the PSC register if it is both relevant and registrable.

A legal entity is relevant in relation to your company if it meets any one or more of the conditions (i) to (v) above and;

• Holds its own PSC register; or
• Is subject to DTRs; or
• Has voting shares admitted to trading on a regulated market in the UK or EEA (other than the UK) or on specified markets in Switzerland, the USA, Japan and Israel

A RLE is registrable in relation to your company if it is the first relevant legal entity in the company's ownership chain.

Where a RLE has been identified, the following details must be obtained and entered into the PSC register;

• Name of the legal entity
• The address of its registered or principle office
• The legal form of the entity and the law by which it is governed
• Registration details
• Date the legal entity became a RLE
• Nature of control

What is meant by ‘significant influence or control' over the company

Condition 4 states that any individual who has the right or actually exercises significant influence or control over the company needs to be entered into the PSC register. We currently only have draft statutory guidance on the meaning of ‘significant influence or control' but this guidance states:

• ‘Control' means the direct power to direct the policies and activities of the company
• ‘Significant influence' means that a person can ensure that the company adopts those policies or activities which are desired by the holder of the significant influence
• Significant influence or control can go beyond the financial and operating policies of the company and does not have to be exercised by a person just for their own economic gain. It also covers the direct or indirect right to exercise actual significant influence or control, whether the right is created through provision in a company's articles, shareholders' or investors agreement, share rights or otherwise. Note that a person holding such a right must be entered in the PSC register irrespective of whether the right has or will be exercised.

Examples given in the draft statutory guidance of rights to, or actual exercise of, significant influence or control include:

• Having absolute decision rights or veto rights over decisions relating to the running of the business of the company
• Being involve in the day to day management of the company where they are not a member of the board (or even a shareholder)
• Whose recommendations are always or almost always followed by the shareholders
• which hold the majority of the voting rights in the company, when they are deciding how to vote.

Companies without PSC's

The PSC requirement apply whether the company has a PSC or not. If all reasonable steps have been taken and the company is confident that there are no individuals or legal entities which meet any of the conditions, a statement to this effect must be added into the register.

Confirming information

The company must confirm information about a PSC before it is entered onto the PSC register. This applies if the company has reason to believe there is a PSC, but have not identified who they are. Or, they know who they are, but do not have their full details. Again, statements to this effect must be entered into the PSC register.

Useful links

Statutory guidance for companies and LLPs

Companies House