Person Of Significant Control (PSC)

A Person of Significant Control (PSC) is an individual or legal entity that meets one or more of the following criteria, thereby exerting significant control over a company:

• Direct or Indirect Ownership: Holding more than 25% of the company's shares.
• Voting Rights: Possessing more than 25% of the voting rights in the company.
• Appointment or Removal of Directors: Having the power to appoint or remove the majority of the board of directors.
• Significant Influence or Control: Exercising significant influence or control over the company or its management.
• Trusts or Partnerships: Having significant control over a trust or firm that meets any of the above conditions.

These criteria ensure that individuals or entities with substantial control over a company are identified and disclosed, promoting transparency and accountability.

The Role of Companies House

Companies House, the UK’s registrar of companies, plays a crucial role in maintaining the PSC register. All UK companies, including limited companies, limited liability partnerships, and unregistered companies, are required to maintain a PSC register and submit this information to Companies House. The PSC information is then made available on the Companies House website, contributing to the public register of beneficial owners.

Identifying and Registering PSCs

To comply with the PSC regulations, companies must take reasonable steps to identify their PSCs. This involves reviewing the company's governing document, shareholders agreement, and partnership agreement to determine who meets the specified conditions of significant control. Once identified, the company must record the PSC's personal details, including name, date of birth, nationality, service address, and residence correspondence address, in the company's PSC register.

Legal Entities and Relevant Legal Entities

In addition to individuals, legal entities can also be PSCs. A legal entity consisting of a corporation sole, government department, or international organisation may qualify as a relevant legal entity if it meets the criteria for significant control. These entities must also be recorded in the PSC register, ensuring that all forms of control are documented.

The Importance of Corporate Transparency

The PSC regime is a cornerstone of the UK’s efforts to enhance corporate transparency. By requiring companies to disclose their beneficial owners, the regime aims to combat tax evasion, money laundering, and other illicit activities. Public companies and small businesses alike are subject to these requirements, ensuring a level playing field across the corporate landscape.

Exceptions and Limited Circumstances

While the PSC regime is comprehensive, there are exceptions set for certain limited circumstances. For instance, a company may not need to disclose PSC information if it is a wholly-owned subsidiary of another company that already complies with the PSC regulations. Additionally, certain corporate entities, such as those with voting shares admitted to trading on a regulated market, may be exempt from some disclosure requirements.

Professional Legal Advice and Compliance

Given the complexity of the PSC regulations, companies are encouraged to seek professional legal advice to ensure compliance. Legal professionals can assist in identifying PSCs, completing the necessary documentation, and submitting accurate information to Companies House. This is particularly important for companies operating in two or more countries, where additional legal requirements may apply.

Maintaining and Updating the PSC Register

Once a company has established its PSC register, it must keep the information up to date. This involves regularly reviewing the register and making necessary changes if there are any alterations in the company's control structure. Companies must also ensure that they have completed taking reasonable steps to verify the accuracy of the information recorded.

The Impact of the PSC Regime

The introduction of the PSC regime has had a significant impact on corporate governance in the UK. By increasing transparency and accountability, the regime has helped to build trust in the corporate sector. It has also provided valuable information to stakeholders, including investors, regulators, and the public, about the individuals and entities that exercise significant influence over companies.

Conclusion

The Person of Significant Control (PSC) framework is a vital component of the UK’s corporate transparency efforts. By requiring companies to identify and disclose individuals and legal entities with significant control, the regime promotes accountability and helps to prevent illicit activities. As the corporate landscape continues to evolve, the PSC regime will remain a key tool in ensuring transparency and trust in UK companies.

For companies navigating the complexities of the PSC regulations, seeking professional advice and maintaining an accurate PSC register are essential steps in achieving compliance and fostering a transparent corporate environment.