What’s a Person with Significant Control (PSC)?

People with Significant Control are individuals or legal entities who hold substantial influence or control over a company and/or over particular areas of that business.

In the context of a startup, this could be an owner, a shareholder or even an individual outside the company who exercises a notable level of authority. UK company law introduced the PSC register to enhance corporate transparency, combat financial crime and prevent money laundering.

The PSC Register – why you need one

The Companies Act 2006 requires companies to maintain a PSC register, disclose individuals with significant control and submit annual PSC information to Companies House.

The PSC register should contain detailed information about the individuals who are considered PSCs within your company. Here's what you need to include:

• Full name – the complete legal name of the PSC
• Date of birth – the PSC's date of birth to uniquely identify them
• Nationality – the country of citizenship of the PSC
• Residential address  – the address where the PSC resides
• Service address – if different from the residential address, provide a service address
• Nature of control – specify the extent and nature of the PSC's influence or control

Determining a PSC, the conditions and categories

Identifying a PSC can be a straightforward process if you know what to look for. You’ll need to classify what percentage of shares of voting rights they control using the below classification. UK law has defined specific conditions to classify an individual as a PSC:

• Direct ownership – an individual who owns more than 25% of the company's shares is a PSC.
• Indirect ownership – if a person has control over a corporate entity (e.g., a holding company), which, in turn, owns more than 25% of your company, they’re considered an indirect PSC.
• Significant voting rights – anyone with significant voting rights in the company (over 25% of total votes) is a PSC.
• Contractual arrangements – if someone has the right to exercise significant control over your company through contracts, they qualify as a PSC.
• Trust control – a PSC can also be an individual who exercises significant control over a trust or firm that holds significant control over your company. Companies House must be made aware if a PSC is a firm or a trust.

PSC and your business obligations

It's important to fulfil specific obligations regarding the PSC register:

• Maintaining an accurate register –  ensure that the PSC register is up-to-date, accurate, and accessible to authorities and shareholders upon request.
• Recording changes promptly – any PSC status or information changes should be recorded promptly in the register and within 14 days.
• Filing with Companies House – as mentioned, you’re required to submit your PSC information to Companies House as part of your annual confirmation statement.
• Providing information to relevant parties – shareholders, potential investors, and financial institutions may request access to the PSC register. You must provide the necessary details within five working days.

Failure to comply with PSC regulations can lead to serious consequences for your startup. The potential penalties include fines, prosecution and even imprisonment in extreme cases. Non-compliance can also affect your company's reputation and hinder its growth.

Wrapping up

Having a clear understanding of Person with Significant Control regulations and maintaining an accurate PSC register is vital for the growth and success of your startup. By embracing transparency and complying with legal requirements, you build trust with stakeholders and protect your company from potential risks.

Understanding PSC regulations can be complex, especially for startups with limited resources. If you find yourself uncertain or overwhelmed, consider seeking professional advice from one of LawBite’s expert business lawyers. They can help you set up a PSC register and assist with all your legal governance requirements.

Remember, the PSC register isn’t just a legal requirement; it's a powerful tool to showcase your commitment to transparency and corporate governance in your business practices.