Persons of Significant Control (PSC) are individuals or entities that have significant influence or control over a company or organization. This concept is a key part of corporate transparency and governance, aimed at identifying those who have a significant stake or influence in a company.
PSC legislation came into force on the 6th of April 2016 and when the legislation was introduced companies generally added the correct person or entity as a PSC but did not always list the correct PSC conditions.
The criteria for identifying PSCs typically include:
- Holding more than 25% of shares in the company.
- Holding more than 25% of voting rights in the company.
- Having the right to appoint or remove a majority of the board of directors.
- Having significant influence or control over the company, trust, or partnership.
- Having significant control over a trust or firm that meets any of the above conditions.
Common Persons of Significant Control Conditions not listed
The most common conditions not listed are voting rights and the rights to appoint and remove directors.
When holding shares in a company most shares will also hold voting rights and therefore the persons of significant control conditions must also state this condition.
If a person or entity holds more than 75% of the shares and voting rights the person or entity will also have the rights to appoint and remove directors.
Why is important to correct the Persons of Significant Control Conditions
With the introduction of the Economic Crime and Corporate Transparency Act 2003, Companies House now have increased powers to check the information held.
We have seen a number of letters from Companies House requesting that companies correct the PSC conditions.
If you would like more information or any advice on this article, then please contact us by emailing solutions@ellacotts.co.uk or call us on 01295 250401.
Information for readers: This material is published for the information of clients. It provides only an overview of the regulations in force at the date of publication, and no action should be taken without consulting the detailed legislation or seeking professional advice. Therefore, no responsibility for loss occasioned by any person acting or refraining from action as a result of the material can be accepted by the authors or the firm.
