Persons with Significant Control – what are they and how do you create a PSC register?

Since 6th April 2016, nearly all UK companies have been required to maintain a register of Persons with Significant Control (also known as a “PSC register”).

The PSC register obligations were introduced as part of the Small Business Enterprise and Employment Act 2015. The government intended to enhance corporate transparency where complicated ownership structures can sometimes make it difficult to tell who owns and controls companies.

The register forms part of the Confirmation Statement – which must be filed annually by companies of all sizes.

This guide explains to small business owners what a Person with Significant Control is, how to produce a PSC register, and what companies need to do to keep Companies House happy.

Which companies need to maintain a Persons with Significant Control register?

All UK limited companies, limited liability partnerships (LLPs), community interest companies (CICs), public limited companies and unlimited companies must all create and maintain a PSC register.

Both new and existing companies are required to maintain a PSC register, whether dormant or active.

Sole traders, ordinary partnerships, limited partnerships (LPs) and Charitable incorporated organisations (CIOs) are NOT required to maintain a PSC register.

Who is defined as a Person with Significant Control (PSC)?

For most small businesses, the three most likely criteria that would make an individual a Person with Significant Control are as follows:

• Any individual who owns more than 25% of the company’s shares
• Any individual who holds more than 25% of the company’s voting rights
• Any individual who has the power to appoint or remove a majority of the company’s board

If one or more of the above statements is true, then that person is defined as a PSC and must be added to the register.

Additional criteria apply for individuals who have the right to exercise significant influence or control over the company or over a trust and for companies that exert influence or control. The full details of these more complex situations are here.

How do I create a PSC register for my company?

The legislation requires companies to take “reasonable steps” to determine whether there are any PSCs and, if so, to identify them.

For the majority of small companies, the process of identifying PSCs is straightforward. PSCs are likely to be any of the company’s shareholders who own more than 25% of the company’s shares and no one else.

For example, in a company with just two shareholders who each own 50% of the shares and where the company has adopted the model articles, it will typically be these two shareholders and no one else who will be PSCs.

Tip: Remember that the traditional consideration of an individual with 51% or more of a company’s shares being “the person with control” and individuals with less than 50% not having control, does not apply to the PSC regulations. You only need more than 25% of the shares in issue to count as a person with significant control.

How do we get PSCs to confirm their details?

You may have all the required details of your PSCs to hand. However, to fully comply with the new rules, you should request each PSC (or individuals you think may be a PSC) to confirm their details.

A formal notice (known as a 790D) is a request from the company to an individual asking them to confirm whether they are a registrable person and the nature of their control over the company. It is an offence for the individual not to reply.

Once the “confirmed” information has been received, it can be entered on the register.

If you are unable to identify an individual you suspect is a PSC, you can serve a 790D request on anyone you believe will know the PSC’s identity. This may include people like solicitors, accountants, or family members.

Tip: Remember to update your PSC register to confirm you have sent out a 790D request – even while you wait for the individual to respond.

What to do if the company does not have any PSCs?

It is quite possible for a company not to have any PSCs. For example, a company with five shareholders each owning 20% of the shares (and voting rights) will likely not have any PSCs – although it is important to check all the criteria.

In these cases, a general statement must be added to the register to declare that the company does not have any PSCs.

Tip: The register cannot be blank – if you are still in the process of reviewing who the PSCs are then a statement to this effect should be added.

What to do if the company does not have shares?

Companies limited by guarantee and limited liability partnerships do not have shares or shareholders. These companies must still maintain a PSC register, but the criteria relating to shares do not apply in the same way.

What information must be added to the PSC register?

For each Person with Significant Control, you need to enter the following information on your PSC register:

• Name
• Date of birth
• Nationality
• Country of residence
• Service address (the official address Companies House/HMRC will use for correspondence with the PSC)
• Usual residential address
• The date on which the individual became registrable
• The nature of their control over the company

Tip: For shareholdings and voting rights a number of bandings are defined: more than 25% but less than 50%, more than 50% but less than 75%, 75% or more – and each entry to the register must indicate which banding the PSC falls into.

When to update the PSC register

As you become aware of changes that have (or may have) affected who are PSCs of the company the register must be updated.

For example, if a share transfer is made, it is possible that a new PSC will be created and that someone who was previously a PSC will no longer be.

Similarly, an allotment of new shares could introduce new PSCs but lead to some existing PSCs no longer meeting the criteria.

Tip: If you believe that a new shareholder may be a PSC the company must contact the individual to ascertain whether they meet the criteria and, if so, to gather the required information to enable them to be entered on the register.

Who can see the information in the PSC register?

Companies House maintains a global register of PSCs that can be publicly inspected. If you search for any company on the register, you can view its PSC details.

All UK companies required to maintain a PSC register must submit this information to Companies House at least once per year. The company’s confirmation statement includes the PSC information.

Tip: Remember that the PSC register is one of many statutory registers a company is required to maintain. It must be kept up to date at all times as anyone with a “proper purpose” can request to inspect it.

Still have questions?

This guide focuses on the core PSC legislation affecting small businesses. For more in-depth information on PSCs, see this page of the Gov.uk website and these guides from Inform Direct.