Draft guidance has been published by the Business, Innovation & Skills department (BIS) on what will constitute "significant control or influence" when companies have to start keeping a PSC register – the new register of persons with significant control or influence in the running of a company.
The duty to keep the new register comes into effect in April 2016 (deferred from January), and from the end of June a company will need to submit the registers to Companies House as part of its annual confirmation statement, which will replace the annual return.
In terms of the draft guidance, a person with "significant control" is an individual who either owns or controls more than 25% of a UK company’s shares/voting rights; or has the ability to exercise significant influence or control over the company and/or its board.
Significant control and influence are stated to be alternatives, the former meaning power to direct the company's policies and activities, whereas "significant influence" means the ability to ensure that the company adopts those policies or activities which are desired by the influencing person.
These could include decisions related to adopting or amending a company’s business plan, changing the nature of a company’s business or making additional borrowing from lenders.
The draft guidance also sets out a number of "safe harbours" which will not in the normal course of business constitute significant influence or control, which include exclusions for directors, company employees acting in the course of their employment, those providing advice or direction in a professional capacity, for example lawyers or accountants, and those engaging in third party commercial or financial agreements, for example, a customer or lender.