The most common form of company is a Private Limited Company by shares. The company is owned by the shareholders and there must be at least one shareholder to take at least 1 share upon incorporation. The shareholders appoint directors to run the company. It is not uncommon in a small company for there to be one shareholder who is also the sole director.
However, what is confusing people is the new Persons of Significant control register that came into force on 6th April 2016 and what has to be disclosed to ensure the Company as acting within the law. Not all shareholders are PSC’s and some PSC’s may not be direct shareholders.
A Person of significant control (PSC) is somebody who:
- owns more than 25% of the company’s shares
- holds more than 25% of the company’s voting rights
- holds the right to appoint or remove the majority of directors
- has the right to, or actually exercises significant influence or control
- holds the right to exercise or actually exercises significant control over a trust or company that meets any of the other 4 conditions.
Note that the ownership is director or indirect, so a beneficial shareholder who is not the actual nominee shareholder listed as a shareholder must still be listed as a PSC! The objective here is transparency so it is clear who is in control of a company.
A large proportion of those setting up a company forget to complete the PSC section to include anyone owning over 25% of the company and are technically in breach of the company. A large proportion also complete incorrectly.
Common mistakes in filling PSC include:
- Failing to disclose a sole shareholder as a PSC
- Failing to disclose a spouse of a main shareholder as a PSC
- Failing to disclose voting rights (not just shareholding itself)
- Failing to disclose whether the PSC has the right to appoint or remove the majority of directors.
In addition to the above, listing a spouse as a Company Secretary when in fact they intended them to be a part-owner of the company (shareholder and PSC) is also a common mistake with potentially serious financial consequences.
If you choose our Pre-submission review our submission experts will check your PSC register along with other information and then correct any mistakes for you before registration to avoid rejection. Better to pay a small fee and stay compliant than run the risk of breaking the law, where directors are liable for the conduct of a company.
If you are looking to register your New UK Limited Company you can use our simple and secure online system to form your company in just 10 Minutes.