A person with significant control is an imperative element of a limited company to the point where Companies House sends you a warning if you don`t have one!
What is a Person with Significant Control (PSC)?
Considering a limited company in England, the law requires that every company must have at least one person with significant control (PSC). A PSC is an individual, an entity or a company that owns more than 25% of the shares. Additionally, they can be someone who holds more than 25% of the voting rights or someone who holds the right to appoint or remove the majority of the company's board members.
What is the Difference between a PSC and a Company Director?
A PSC is not necessarily a director since their roles differ. A PSC's role is to protect and maintain control over 25% or more of a company’s shares. In contrast, directors have the responsibility to manage and run a business. Directors are responsible for setting the company’s goals, developing strategies to achieve them, and making sure that the company is ethically run.
Do I Need a PSC for My Business?
Yes, it is mandatory by law that every limited company must have at least one person with significant control (PSC). Companies House will send you a warning if you don’t have one.
Who is Entitled to be a Person with Significant Control?
A person with significant control can be an individual, an entity or a company that owns more than 25% of the shares. Additionally, they can be someone who holds more than 25% of the voting rights or someone who holds the right to appoint or remove the majority of the company's board members.
If a PSC has given their consent to be listed on the public register they will be identified by name and must provide additional information such as; date of birth, nationality and residential address. When it comes to identifying entities and companies, it may require additional information such as the name of the company and its registered address.
It is important to keep accurate records of who has significant control in your company, as you will be required to submit this information when filing confirmation statements or annual returns with Companies House.
Is a CEO a Person with Significant Control?
A CEO is not always a person with significant control because it depends on the shareholding structure of the company. The CEO could be a PSC if they hold more than 25% of the voting rights, and shares or have the right to appoint or remove the majority of board members. However, this is not always the case and it varies from business to business.
It is important to keep accurate records of who has significant control in your company, as you will be required to submit this information when filing confirmation statements or annual returns with Companies House. It may also be necessary for a board meeting to approve the appointment of the PSC before they are officially registered by Companies House.
Furthermore, it is important that companies take the necessary steps to ensure that their PSC is up-to-date and accurate. This includes keeping detailed records of any changes to their PSC, such as new appointments or resignations, and filing a confirmation statement with Companies House at least every twelve months.
Can a Person with Significant Control Remove a Director?
Yes, a PSC can remove a director if they have the right to appoint or remove the majority of board members. However, it is important to note that directors can only be removed in accordance with the company’s articles of association and other regulations set by Companies House. For example, all directors must receive written notice before their removal.
In addition, it is important to note that a PSC cannot be held liable for any acts or omissions of a director. It is the duty of each individual director to meet their obligations and ensure they are taking all necessary steps to ensure compliance with the Person with Significant Control Companies Act 2006 and other relevant legislation.
It is essential that companies show due diligence when monitoring their directors’ actions and ensuring that they are meeting their obligations. Failure to do so could lead to legal action against the company or its directors by Companies House or other authorities.
As a result, it is important for companies to ensure they have adequate systems in place to monitor the actions of all directors and persons with significant control. This includes regularly reviewing the performance of directors and PSCs to ensure that they are meeting the expectations of their role.
In Conclusion
It is essential for companies to have a person with significant control (PSC) in order to meet the legal requirements set by Companies House. A PSC can be an individual, entity or company that holds more than 25% of the shares, and voting rights or has the right to appoint or remove the majority board members. Additionally, it is important for companies to keep accurate records of their PSC and to regularly review the performance of individuals with significant control in order to ensure compliance with relevant legislation.
