What is Person with Significant Control in the UK (PSC)? Explained

What is PSC?

PSC stands for Person with Significant Control. It means a person who has significant influence or control over a company is referred to as a trailblazing agent. This role can undermine the rights of nominal ownership in situations where there is no legal or practical basis for such influence. This person could be an individual, another company, or even an entity that has the authority to set policies for the company or divert income from its operations.

In 2016, the UK government enacted legislation that brought about major changes, requiring all companies to create a register of individuals or groups with significant control. This move was strongly advocated by the UK authorities to reveal those who are controlling and benefiting from each company. The legislation aimed to prevent individuals with dubious intentions from hiding behind innocuous company names within the business environment. It also made it easier for authorities to trace anyone involved in questionable activities.

Is It Necessary for My Company to Maintain a PSC Register?

Most companies in the UK must keep track of what truly runs the organization behind the scenes. For example, companies with private shares or guarantees are required to maintain this register. Public companies usually need one as well unless they qualify for specific exemptions under UK law. Even if your company has unlimited liability, is a European company, or is not registered in any form, you are still required to maintain this record.

It doesn’t matter what type of business you are running. Could be doing absolutely nothing, working for the community, or even running a charity, rules still stand. The bottom line is quite plain: if you run a company in the UK, you probably need to keep a list of the people who have real control over your business decisions and finances.

Companies That Are Exempt from Having a PSC Register

Some categories of companies will never require a PSC register. For example, if you operate an investment company open to new investors, it won’t apply to you. Foreign companies that conduct business outside the UK, whether they are registered elsewhere or not, will not have bothered with this either.

Community interest associations will also come with exemptions. These include cooperative societies, community-benefit societies, friendly societies, and so on. These include charities that are specifically formed for incorporation, and charity trustees who have incorporated themselves into a body.

How To Determine Who Has Significant Control?

Some detective work to do to track the real power holders. The company must have taken genuine steps to find any person who might reasonably qualify as a person with significant control and put their names on the list.

A person has significant control if that person meets any one or more of the following conditions: more than 25% of the company’s shares are owned by him/her or more than 25% of voting power is exercised by him/her; he/she has the power to appoint or remove the majority of the board of directors; otherwise, he/she can exercise control over the company; or a trust or a partnership is controlled by him/her in such a manner that if it were incorporated, it too would meet any of these tests.

If someone fails to meet just one definition for significant control, we cannot stop right there; rather, we need to consider all five definitions when we assess that person and provide any that apply. This will indicate exactly what power he or she has, and what level of control he/she exerts.

A whole company is owned by another company instead of an individual. Such an entity will then be seen as a relevant legal entity. 

Where Can I Search for KYD Information?

A lot of work must go into uncovering who runs the business you work for. The authority expects you to act as any rational individual with the information you have would.  

Start by compiling all the forms and the usual information you have. Individuals are not the only ones who count; partnerships, as well as unincorporated and unregistered trusts, also qualify as controllers. You will have to pursue any leads about persons who may directly control or exert influence over other companies or arrangements.   

Check different places for different types of control. To identify who controls more than 25% of shares, check the member register, the company’s internal rules, and capital statements. For voting rights, check the same documents, plus any ancillary shareholder agreements, and how people vote at the meetings.  

To identify who can appoint and remove directors, check the company’s articles of association as well as other documents containing regulations on board member elections. For more complex forms of control, like having a significant but indirect influence on controlling trusts that control your company, you have to follow the official policy. 

What To Do After Identifying?

After identifying stakeholders with significant control in the company, you need to gather specific information about them and quantify their actual control. But here is the problem, if the person is an individual, you won’t be able to add them to your register until you confirm each detail is accurate.  

You will need to gather for individuals their name, date of birth, nationality, business, and residential address when they became a controller, what conditions enable them to meet control, and if they possess shares or voting rights, the exact amount needs to be specified. It is not necessary to verify general influence if they qualify through shares, voting rights, or as a director.  

This information, along with any related documents, needs to be submitted to Companies House within 14 days of verification. The submission can be done using form PSC01 or through the online portal.

A lot of the information will be visible on the Companies House register, save for personal addresses, which will remain confidential.

Is It Necessary to Keep My PSC Register Updated? 

Yes, absolutely. You must be up to date with your PSC register, and this oversight can get you into trouble. Up-to-date information that is not maintained can lead to wrongful convictions of the Company Directors for criminal offenses, which may incur fines or jail time.  

Whenever there is a transfer of shares, a change in voting policies, or a shift in authority on who gets to appoint directors, you have two weeks to update the register from the time you become aware of the change. This is irrespective of attending to the processes that take longer, such as the issuance of new shares or modifications to the company structure.  

For every change your business undergoes, ask yourself whether there is someone who holds significant control over it. For example, and not restricted only to, whenever the company deems it fit to issue new shares, onboard new stakeholders, or the whole rebranding process. There is no need to wait for someone to come to you and inform you that the register is inaccurate; take the bold initiative and report to act upon the changes.  

Conclusion

Maintaining a PSC register may feel like an additional chore, but it significantly helps businesses in the UK to operate legitimately. The government’s aim in establishing these rules is to enhance accountability and ensure transparency by mitigating fraud through enhanced business pre-identification verification.  

Companies need to keep this register, and most of them follow a similar approach to addressing this issue. Identify the people who own more than a quarter of the shares, have significant voting powers, can appoint directors, or have considerable other substantial influence over your company. Gather their information, file it with Companies House, and make sure to update it regularly.  

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