Given the following:
- A small company with a straightforward structure
- Company limited by shares
- Using model articles
- Using default prescribed particulars (ie. the default as provided by CH Web Incorporation Service)
- 4 or more person shareholders, each with equal shares
What PSC condition should be used?
I realise the easy response here is to say you can’t advise, and it’s up to the company to work it out. But there are a lot of “mum & pop” companies being set up for which this is confusing.
What I’m trying to understand is whether “no registrable person” is a valid answer here, or if it is more likely to be all shareholders listed as PSCs with the more generic “the person has significant influence or control over the company”?
I’m trying to understand whether “no registrable person” is an incredibly niche case, that is hardly ever used, or whether this is the precise use case for it.
Given the scenario you describe (and this is just my opinion), none of the subscribers would be PSCs in the context of shareholdings or voting rights as they would not be over the 25% threshold. There’s still the question of whether the two remaining conditions would apply:
- Right to appoint/remove directors
- Significant Influence or Control
I believe directors can be appointed by ordinary resolution of the board, without the members being involved if the company adopts the Model Articles. So if all the members were also directors, no individual would have executive control on their own. If only one of the members were a director that would be different, but in theory other members can still collectively veto such a decision.
The last one “Significant Influence or Control” is vague but is likely to apply to more complex arrangements that cede control of the members to other individuals working behind the scenes. This could be some sort of Power of Attorney arrangement.
Like I said this is just my interpretation. I really don’t believe it will be that uncommon for companies to not have a PSC.
I work in Policy at CH. I understand that the world of PSC is potentially a minefield. I can’t say definitively whether a company will have PSCs, but on the surface the situation you outline seems to suggest there would be no PSCs.
It isn’t necessarily only niche cases that won’t have PSCs, if there are 4 or more shareholders with equal amounts of shares and none of the other conditions come into play the correct answer will be “there is no registrable person or registrable relevant legal entity”.
I’ve added a link to a video below, which is on our website and goes through some basic examples of working out whether or not a company will have PSCs.
Hope that helps