Who controls your business?
I’d like to think that I have some control over where I go on holiday, what car I drive or what film we’re going to watch on the television tonight. Sadly, in most instances, I get overruled.
Although I pay the bills, do building maintenance and even mow the lawn (weather allowing), I have little control of what actually goes on. Mostly, these decisions are made by my partner… or the kids.
But, it’s very similar if you’re running a business.
The law requires all UK private limited companies, limited liability partnerships (LLPs) and societas Europaea (SE) to tell us about the people with significant influence or control over the company. In other words, who’s pulling the strings.
The register of people with significant control (PSC) was introduced in April 2016 to improve corporate behaviour, deter money laundering and help to sanction those who hide their ownership or control of UK companies for the purpose of facilitating illegal activities.
So, who are these people with significant control?
Well, in my house, it’s my better half and the kids. But, in your company there could be several people who qualify. We also have a short video explaining how to identify your PSCs.
Basically, a PSC is anyone in the company who meets one or more of the conditions listed in the People with Significant Control Regulations 2016. A company can have more than one PSC.
A PSC is a person who:
- holds, directly or indirectly, more than 25% of the shares
- holds, directly or indirectly, more than 25% of the voting rights
- holds the right, directly or indirectly, to appoint or remove a majority of directors
- otherwise has the right to exercise, or actually exercises, significant influence or control over the company
- has the right to exercise, or actually exercises, significant influence or control over the activities of a trust or firm which is not a legal person, the trustees or members of which would satisfy any of the four conditions above
For most small companies, their PSCs are likely to fall into the first and second, and possibly the third, category above. The fourth and fifth categories are typically associated with more complex corporate structures.
Once you’ve identified your PSCs, you need to record their detail on your own PSC register and inform us.
The information you must obtain, confirm and enter on your company’s own PSC register, will depend on whether the PSC is a person or a registrable relevant legal entity (RLE).
If, for some reason, the PSC information cannot be provided, other statements will need to be made instead to explain why the PSC information is not available. The register can never be blank.
Information on the company’s register and on the PSC register at Companies House must be kept up to date. You must enter new information on your own register within 14 days and provide the updated information to us within a further 14 days.
Failure to provide accurate information on the PSC register and failure to comply with notices requiring someone to provide information are criminal offences.
So, who controls your business?
As my partner always says, she has two complaints about me. One, I don’t listen. And two… something else.