How to identify a person with significant control (PSC)?

Identifying a Person with Significant Control (PSC) within a company is crucial for maintaining transparency and complying with regulatory requirements. A PSC is an individual who holds substantial influence or control over a company, often beyond what’s typically exercised by directors or shareholders. Understanding the characteristics and indicators of a PSC is essential for ensuring corporate governance and accountability.

Typically, a PSC can be identified through various means, including examining share ownership, voting rights, and influence over company decisions. Additionally, scrutinizing contractual arrangements, such as agreements that confer significant control or veto powers, can unveil individuals with substantial influence within the organization. Identifying these key individuals enables companies to fulfill their legal obligations, enhance transparency, and mitigate the risks associated with undisclosed control.

How to identify a person with significant control (PSC)? – 4 Examples

A PSC refers to an individual who has ownership or control over your organization.

To know who the PSCs are, you should examine your organization’s members’ registry or the articles of association for data on shareholders and voting rights. Generally, most PSCs satisfy one or several of the following conditions: owning more than 25% of the company’s shares, possessing over 25% of the voting rights, or having the authority to nominate or terminate the majority of directors. Let’s illustrate this with a few examples.

Example 1: Company A Limited

Sam has 100% ownership of shares for Company A Limited, which come with voting rights. As a result, Sam qualifies as a PSC and his details, including the exact percentage of shares and voting rights, should be listed in the PSC register. The company needs to verify whether Sam has the power to nominate or discontinue most directors, and record that information if relevant.

Example 2: Company B Limited

In Company B Limited, Charlie and Harri each hold 50% shares, which come with voting rights. They qualify as PSCs and their corresponding details such as share percentages and voting rights should be enlisted in the PSC register. The company also needs to verify whether Charlie or Harri has the authority to nominate or terminate mostly directors and incorporate that, if necessary.

Example 3: Company C Limited

In Company C Limited, Toni owns 75% of shares, while Francis owns only 25%. Both their shares come with voting rights. Toni qualifies as a PSC and his details should be documented in the PSC register. Francis, however, does not qualify as a PSC because he does not own more than 25% shares or voting rights. The organization should also verify whether Toni or Francis has the ability to nominate or terminate most directors, and include that if relevant.

An individual might still be a PSC without meeting the earlier conditions, although this situation is limited. A person can have influence or control over your organization via other means such as directly or indirectly controlling the actions of directors or shareholders.

Example 4: Company D Limited

Take Company D Limited for example, where George owns zero shares but possesses complete veto power over the company’s business plan. George should be considered a PSC and his details should be listed on the register. Numerous instances can lead to someone exerting significant influence over an organization and specific guidance can be found on GOV.UK.

If your company is controlled by anything other than an individual, please refer to our guidance on our website. For advice, follow the provided link. The most efficient way to submit your PSC information is through online filing. It is simple, free, and only requires account registration. For more information on PSCs and how to identify them, you can visit the provided link.

Recognizing a Person with Significant Control (PSC) is pivotal for fostering transparency and upholding corporate integrity. By diligently examining various factors like shareholding structures, voting rights, and contractual arrangements, organizations can pinpoint individuals exerting substantial influence within their ranks.

Moreover, the identification of PSCs bolsters regulatory compliance efforts and strengthens corporate governance frameworks. It empowers companies to mitigate the risks associated with undisclosed control and ensures that decision-making processes remain accountable and transparent. Ultimately, by proactively identifying and acknowledging PSCs, businesses can uphold their commitment to ethical practices and stakeholder trust.

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