It is now necessary for people ‘behind’ limited companies to be identified and recorded. These are known as ‘People with Significant Control’ (PSC). Many legal firms will require this information when carrying out identification and due diligence procedures to act for a company client.
It is also necessary to record and provide this information to Companies House on a PSC register. This requirement was introduced on 6th April 2016. Since that date, all UK private limited companies and limited liability partnerships have been legally required to maintain the PSC register and to send that information to Companies House - when they submit their first ‘annual confirmation statement’ (formerly known as the ‘annual return’).
The reason behind this register is to improve transparency in relation to companies. This will ensure that the public, enforcement agencies and other businesses know who owns and controls companies. It is also hoped that these measures will improve corporate behaviour and deter money laundering.
A person with significant control (PSC) is someone who owns or controls a company. They are sometimes called ‘beneficial owners’.
A PSC must meet one or more of the following conditions of control.
Most PSCs are likely to be people who hold:
- more than 25% of shares in the company
- more than 25% of voting rights in the company
- the right to appoint or remove the majority of the board of directors
If a PSC holds more than 25% of shares, they are likely to hold the same amount of voting rights.
It might be necessary to look at the company’s constitution and articles of association to decide who is the PSC.
If the PSC information changes, the company’s PSC register must be updated and Companies House must be notified as soon as possible.
These are important but potentially complex requirements. To discuss this or any other company related issue, contact us.