What are they and what do I need to do about PSCs?
PSC stands for People with Significant Control.
The UK government has introduced legislation that obliges companies to maintain a PSC register and ensure that Companies House has an up to date record of their PSCs as things change.
On Vestd, if you so wish, we will help with that by maintaining your PSC register on the platform, and making appropriate updates to Companies House on your behalf once you have approved them.
In summary, an officer of the company is required to:
- Identify the people with significant control (PSCs) over the company and confirm their information;
- Record the details of the PSC on the company’s own PSC register within 14 days;
- Provide this information to Companies House within a further 14 days;
- Update the information on the company’s own PSC register when it changes within 14 days, and update the information at Companies House within a further 14 days; and
- Confirm to Companies House that information on the public register is accurate, where it has not been updated in the previous 12 months.
A PSC is someone (individual or company) who either has:
- more than 25% of the equity of the company;
- more than 25% voting control of the company;
- the right appoint/remove a majority of the Directors; or
- has the right to exercise, or exercises, significant control over the company.
If a PSC is captured by one of the first three categories, it is not necessary to also include any elements of the last one.
The last element is the most complicated, and below is a summary of what does and does not constitute this.
It counts, where a person has absolute decision rights (or veto rights) over decisions related to the running of the business of the company, for example relating to:
(a) Adopting or amending the company’s business plan;
(b) Changing the nature of the company’s business;
(c) Making any additional borrowing from lenders;
(d) Appointment or removal of the CEO;
(e) Establishing or amending any profit-sharing, bonus or other incentive scheme of any nature for directors or employees; or
(f) The grant of options under a share option or other share based incentive scheme.
However, if a person holds absolute veto rights in relation to certain fundamental matters for the purposes of protecting minority interests in the company then this is unlikely, on its own, to constitute “significant influence or control” over the company.
When used for the purposes of protecting minority interests these veto rights could include (or relate to) the following:
(a) Changing the company’s constitution;
(b) Dilution of shares or rights, including establishing a share option or othershare based incentive scheme;
(c) Making any additional borrowing from lenders, outside previously agreed lending thresholds;
(d) Fundamental changes to the nature of the company’s business; or
(e) Winding up the company.
In addition a person would not have “significant influence or control” where the absolute decision rights or veto derive solely from being a prospective purchaser in relation to the company, on a temporary basis, for example pending clearance by the Competition and Markets Authority.
For more information please visit the UK Government web site page.
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