A person with significant control (PSC) refers to an individual who holds substantial influence or control over a company, either directly or indirectly. The concept of significant control is often used in the context of corporate governance and transparency, particularly in relation to companies and their ownership structures.
Starting from April 6, 2016, the ‘people with significant control’ register was put into operation, ordering all businesses to maintain a record of individuals who possess the capability to shape or direct a company’s operations—these individuals are more commonly recognised as the “beneficial owners” of the company.
Since companies are already obligated to maintain specific particulars within their official records, the introduced PSC register encompasses details such as names, birthdates, and nationalities of individuals. It is the responsibility of the company to verify the accuracy of this information with the respective PSC.
The definition of a PSC may vary depending on the country or jurisdiction, but it typically includes individuals who meet one or more of the following criteria:
- Ownership: Individuals who directly or indirectly own a significant portion of the company’s shares or voting rights. The specific threshold for “significant” ownership may be defined by the relevant laws or regulations.
- Control: Individuals who have the power to exercise significant influence or control over the company’s decision-making processes, such as having the authority to appoint or remove directors.
- Significant influence: Individuals who have significant influence over the company through other means, even if they do not have substantial ownership or direct control.
The concept of PSC has been gaining prominence recently in efforts to enhance corporate transparency and combat money laundering and illicit financial activities. Many countries now require businesses to keep registers of persons with significant control, disclosing information about these individuals to relevant authorities for public scrutiny and regulatory purposes. This allows stakeholders, such as investors, customers, and regulators, to have a better understanding of the individuals who have a significant say in the company’s operations and decision-making.
Identifying a PSC
Most PSCs are those who hold:
- more than 25% of shares in the company
- more than 25% of voting rights in the company
- the right to appoint or remove the majority of the board of directors
Identifying a person of significant control typically refers to determining individuals who hold substantial influence or control over a company or legal entity. This concept is often relevant in corporate and legal contexts, especially for regulatory compliance and transparency. The specific requirements and processes for identifying PSCs may vary by the nature of the entity, but here are some general steps:
- Legal and regulatory framework: Understand the legal and regulatory framework in your jurisdiction that defines and outlines the criteria for identifying PSCs. Different countries may have varying laws and regulations related to corporate transparency and ownership disclosure.
- Ownership structure: Review the ownership structure of the company or entity. This may involve examining shareholder records, stock certificates, and any legal agreements that outline ownership percentages and rights.
- Shareholders and beneficial owners: Identify individuals or entities that directly or indirectly hold a significant percentage of shares or voting rights in the company. This includes both registered shareholders and beneficial owners (individuals who enjoy the economic benefits of ownership without being registered as shareholders).
- Voting rights and decision-making: Determine individuals who have substantial influence over the decision-making processes of the company, even if they do not hold a significant percentage of shares. This could include people with veto power, special voting arrangements, or significant contractual agreements.
- Access to financial information: Consider individuals who have access to sensitive financial information and have the ability to control the company’s financial activities.
- Directors and officers: Assess the roles and responsibilities of directors, officers, and key executives. Individuals who hold top leadership positions and have decision-making authority could be considered PSCs.
- Contracts and agreements: Examine contracts, agreements, and arrangements that grant significant influence or control over the company. This could include contractual relationships that confer decision-making powers.
- Disclosure and reporting: Depending on the legal requirements, the company may need to disclose and report PSC information to relevant authorities. Ensure compliance with reporting obligations and maintain accurate records of PSCs.
Identifying persons of significant control is crucial in enhancing transparency and compliance within companies. It helps prevent financial crimes, fosters responsible corporate governance, and contributes to a more secure and trustworthy business environment. Knowing who holds significant control over a company helps prevent the misuse of corporate entities for illegal purposes, such as tax evasion, corruption, or other illicit activities.
NorthRow’s innovative solution allows you to discover ultimate beneficial owners and corporate directors globally, at your convenience. Our cutting-edge self-service platform equips compliance experts with the ability to identify PSCs/UBOs and confirm their identities through a progressive web application. identity verification, document authentication, liveness assessments, and address validation, streamlining your business onboarding procedures.
To explore how NorthRow can simplify the process, you can schedule a free demo and delve deeper into the capabilities of our identification tool.