A shareholder and a PSC (Person with Significant Control) have lots in common, but there are also key differences which are important to be aware of so you understand your role within a company. In this blog we’ll explain what both are, their core differences, and responsibilities.
What shareholders do in a limited company
Shares are like units of ownership for a limited company, so a shareholder is an individual or organisation that owns some or all of the shares. You can be a full owner, owning all the shares so the whole company belongs to you, or a partial owner and own just one share.
Becoming a shareholder, like anything, has both risks and rewards. On the risk side, dividends are paid out of company profits, so if the company has a bad year (or needs to hold onto cash to fund something else), your dividend could be reduced or skipped altogether. This makes them a less reliable income source than a fixed salary, so it’s worth keeping that in mind if you’re depending on them to cover regular costs.
There’s also no guarantee you’ll get back what you put in, and shares aren’t always easy to sell quickly if you need the cash.
On the upside, if the company grows, you could see bigger dividends and the option to sell your shares for more than you originally paid.
What is a Person of Significant Control (PSC)?
A Person of Significant Control (PSC) is someone who owns or controls the company, sometimes known as the beneficial owner. You’re likely a PSC if you hit one or more of these criteria:
- Directly or indirectly own more than 25% of the company’s shares
- Hold more than 25% of the voting rights
- Hold the right to appoint or remove most of the board directors
- Have significant influence within the company, for example, you have the power to make key decisions
- Have ‘indirect’ control for example, if you hold shares through a trust or a parent company
Key differences between shareholders and Persons with Significant Control (PSCs)
A shareholder owns at least one share within a company, acting as a financial owner. A PSC will likely own shares too; however, they often act as the ‘controller’ making key decisions that impact the company’s day-to-day.
How does ownership and control differ?
It’s easy to get a shareholder and a Person with Significant Control mixed up, but it’s important you don’t – because each serves a different legal purpose and even have different filing requirements.
A shareholder
If you own a small number of shares, you have an economic stake in the company’s profits because you own a portion of the company’s equity. This often gives you the right to have a share of the company’s profits by getting paid a dividend, but it doesn’t always mean you’ll have management or decision-making powers.
A Person with Significant Control (PSC)
As a PSC you’re likely to be the majority shareholder. This means you have both ownership and control, giving you the authority to make key decisions through voting rights, as well as appoint new directors.
For example
Let’s say Person 1 owns 10% of the shares in a company, while Person 2 owns 60% (with the remaining 30% held by other shareholders).
- Person 1 has an ownership stake, but no meaningful control
- Person 2, however, qualifies as a Person with Significant Control (PSC), meaning they have both ownership and the ability to influence or direct the company’s decisions
So, while Person 1 can benefit from the company’s growth in value, they have limited influence. If the business underperforms, they may also have little to no say in how things are changed or improved.
Legal responsibilities and reporting requirements
Because both roles are different, they both have different responsibilities and legal requirements. See the table below to understand the responsibilities of each:
| Shareholder | PSC | |
| Primary goal | Investment returns through the likes of dividends | Transparency and robust oversight |
| Active duties | Depending on their share type, shareholders will vote on major decisions (for example, company name changes or appointing or removing directors). They may also be able to amend the company’s articles of association | The PSC will notify the company of any changes made |
| Reporting responsibilities | In most instances there are no reporting responsibilities – this is taken care of by the company | A PSC must verify both their identity and personal details to Companies House |
| Liability | Liability is limited to their portion of shares | There’s generally no direct personal liability, but they can be subject to penalties for non-compliance |
| Day-to-day | Shareholders don’t have a day-to-day role in the company | A PSC can influence how the company is run, even without being a director |
Can I be both a shareholder and a PSC?
Yes, you can definitely be both – and that is the norm in many companies. For example, a sole owner/director who owns 100% of shares is both the shareholder and PSC. This is also the case if you open a company with an equal partner, you’d both be a shareholder and PSC because you hold 50% of the shares each – meaning there can be multiple PSCs.
A telltale sign is if you own 25% or more of the shares and have 25% or more of the voting rights.
Is it the company or the PSC’s responsibility to update the PSC register?
A PSC register is a legal record in the UK that holds details of each individual who owns or controls a company. The name may suggest that a PSC register is a PSC’s responsibility, but it is in fact the company’s responsibility to update the PSC register, filing any changes with Companies House.
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