Part 1: Determining a PSC – what criteria needs to be satisfied?

This article will consider the assessment criteria for the determination of a PSC status. A PSC is an individual who falls into one or more of the following categories in relation to a company:

1. directly or indirectly holds more than 25% of the shares
2. directly or indirectly holds more than 25% of the voting rights
3. directly or indirectly holds the right to appoint or remove a majority of the board of directors
4. has the right to exercise, or actually exercises, significant influence or control over the company or
5. has the right to exercise, or actually excises, significant influence or control over a trust or a firm that is not a legal entity but which itself satisfies any of the above criteria

The majority of Companies will fall within the top 3 categories and points 4 and 5 can only be utilised when points 1-3 are not applicable.

A common mistake which occurs is that an individual may assume someone is a PSC because of their role as a director, this is incorrect. However, a sole director and shareholder of a company would be a PSC by virtue of their 100% shareholding (satisfying the first condition, owning more than 25% of the shares), rather than by virtue of their directorship.

It is the responsibility of an officer of the company to identify a PSC and make them aware of that position, of which they would normally be aware. The officer of the company would make the necessary changes to the register and filings at Companies House. The timeframes were covered in or previous article.

A share or right will be considered ‘direct’ where an individual owns it themselves, whereas a share or right will be ‘indirectly held’ if the individual holds the right via another mechanism for instance an individual holds 20% in their own name but their pension fund holds another 10%, then this will be considered a mix between direct control and indirect control, totalling 30%.

If you require assistance with any Companies House filings, or if you would like to discuss the contents of this article in relation to your company, please contact Michelle Lamberth of our corporate governance team at michelle.lamberth@herrington-carmichael.com or 0118 989 9706 and we will be happy to assist.

This reflects the law at the date of publication and is written as a general guide. It does not contain definitive legal advice, which should be sought as appropriate in relation to your own particular matter before action is taken.