Persons with significant control
A UK company or LLP must keep a register of persons with significant control over it (its PSCs) unless it falls within one of certain specific exemptions. The exemptions apply only to publicly traded companies listed on the main stock exchange. Companies and LLPs must file their PSC information annually at the UK companies’ registry, which is available to the public.
Broadly, a person has significant control over a company if any of the following apply:
- The person holds more than 25% of the company’s shares (measured by nominal value, not by number of shares).
- The person holds more than 25% of the company’s voting rights.
- The person can appoint or remove a majority of the company’s directors (measured by number of board votes held, not by number of directors).
- The person has the right to exercise, or actually exercises, significant influence or control over the company. (This is a broader condition which captures other forms of control, such as extensive veto rights under shareholders’ agreements. The UK Department for Business, Innovation and Skills has published statutory guidance on situations that may satisfy this condition).
- The person has the right to exercise, or actually exercises, significant influence or control over the activities of a trust or firm which does not have separate legal personality, and the trust or firm satisfies one of the other four conditions above.
These conditions apply regardless of whether the person holds shares in the company and is registered in the company’s shareholder register. The purpose of the PSC regime is to prevent the ultimate owner of a company from concealing his or her identity by, for example, hiding behind a trust or an offshore company.
Failure to comply with an information request is a criminal offence. In addition, if a PSC persistently fails to comply with an information request, the PSC’s interest in the company (which can comprise shares or other rights) can be restricted. The PSC will not be able to transfer that interest, and all voting and dividend rights attached to the interest will be suspended. The regime also applies to LLPs with some modifications. Under the Fourth European Union Money Laundering Directive, the regime will need to be extended to other kinds of legal entity in due course.