The Small Business, Enterprise and Employment Act received Royal Assent in March 2015. This Act brings about significant changes that will affect companies and small businesses. Specifically, Companies, Limited Liability Partnerships and Small Enterprises need to keep a register of people with significant control (‘PSC register’) from 6 April 2016. This will also mean that operators will need to inform the Office of the Traffic Commissioner of those people with significant control.
A Person with Significant Control (PSC) is anyone in a company, LLP or SE who meets one or more of the conditions listed in the legislation. This is someone 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 one of the first 4 conditions.
When considering if a person in the business is a PSC, you may want to consider the following scenarios, bearing in mind that “significant influence” and “control” are alternatives. This is not an exhaustive list.
- Where a person that can direct the activities of a company, trust or firm, this would be indicative of “control”.
- Where a person can ensure that a company, trust or firm generally adopts the activities which they desire, this would be indicative of “significant influence”.
- The “control” and “significant influence” do not have to be exercised by a person with a view to gaining economic benefits from the policies or activities of the company, trust or firm.
- In the context of a company, a person may hold a right to exercise significant influence or control as a result of a variety of circumstances including the provisions of a company’s constitution, the rights attached to the shares or securities which a person holds, a shareholders’ agreement, some other agreement or otherwise.
- The right to exercise significant influence or control is a right which, if exercised, would give rise to the actual exercise of significant influence or control.
- The right to exercise significant influence or control over a company may result in that person being a PSC in relation to the company regardless of whether or not they actually exercise that right.
If you would like to discuss the above information please contact Philip Brown at AMD Solicitors's Road Transport Team by emailing email@example.com.