08 Mar Who controls your company?
Much in the news at the time of its introduction the PSC (people with significant control) register has largely slipped into the background in recent times as pressing issues such as GDPR come to the fore. However, the lack of publicity over the PSC register doesn’t mean that it has become any less valid. It was therefore with interest that we noted a recent Companies House update, highlighting the importance of identifying and registering those who own or control companies.
The Companies House update includes a handy three minute video which outlines how to identify PSCs in a variety of situations. The basic premise of a PSC is someone who owns more than 25% of the shares, has more than 25% of the voting rights, or has the right to approve or remove the majority of directors. However the video also highlights anomalies such as a situation in which people who individually own less than 25% of the voting rights agreed to vote together. In that instance where the aggregate voting rights is in excess of 25%, all of the individuals concerned need to be registered as PSC’s.
For the majority of smaller companies it is quite possible that shareholdings, voting rights and control will rest with a limited number of individuals. But irrespective of the size and nature of the company, it is still important to consider whether others may fall under the significant control banner.
For example, consider the case of a family firm whose founders have largely stepped down from the business and passed their shares onto the next generation. Those founders may still be considered to be PSCs if they continue to control the direction of the company through their influence with the succeeding generation. The Companies House update also highlights the scenario in which a company or trust influences or controls another company. In that instance, those individuals who control the influencing company may need to be registered as PSCs on the register of the company which they indirectly control.
Personal information gathered and reported for PSCs is relatively straightforward. There is an option for those who consider they may be at risk should their personal data be disclosed to apply for protection, in which case their data may be withheld. However, individuals cannot refuse to provide required information with refusal being viewed as a criminal offence.
For company secretaries the message is clear; compiling the PSC register isn’t a one-off and then forget it exercise. Whilst information on the register may remain static, the need to identify and update has to be borne in mind as shares, voting rights and spheres of influence grow and change alongside the business.