PSCs: Long-awaited guidance on ‘significant influence or control’
The Companies House rollout of mandatory identity verification requirements began in November 2025. The requirements are imposed on directors and persons with significant control (PSCs) – but there has been lack of clarity as to who may be deemed to be a PSC for these purposes.
The Department for Business and Trade recently published long-awaited statutory guidance on how companies should interpret ‘significant influence or control’. As it’s statutory, companies will be required to take it into account when investigating and assessing whether a person is a PSC. NB: there is separate statutory guidance on “significant influence or control” in the context of LLPs.
‘Significant influence or control’
A PSC is an individual who meets one of five conditions set out under Schedule 1A of the Companies Act 2006. While Schedule 1A specifies the conditions – which includes those with ‘significant influence’, the DBT guidance is helpful in guiding companies as to what amounts to ‘significant influence or control’ in practice.
It explains the conditions for an individual to constitute a PSC of a company, but only one condition needs to be met. To summarise:
· Conditions 1-3 - the individual holds more than 25% of the shares or voting rights in the company, or the right to appoint or remove the majority of the board.
· Conditions 4-5 – the individual has the right to exercise, or actually exercises, significant influence or control over the company (or the activities of a firm or trust meeting another specific condition relating to the company).
Helpfully, the guidance provides examples of persons and activities who may constitute a PSC. A person can constitute a PSC even if they are not exercising ‘control’ and/or ‘significant influence’ to derive financial gain from the company policy or activities.
The guidance points out that the right to exercise significant influence or control can be derived from, for example, the company’s constitution, shareholder rights or a shareholders’ agreement. If a person can direct the company’s activities, this would be indicative of ‘control’.
Not within scope
Certain roles are listed as ‘excepted’ roles and relationships. Though this is not an exhaustive list and the person’s role and activities should be assessed in the round before a conclusion is reached as to whether they constitute a PSC.
‘Excepted’ roles include lawyers, accountants, tax advisers and management consultants acting in their professional role.
Verifying identity
Most if not all companies and directors will, by now, have been contacted directly by CH reminding them of their obligations and the risk of non-compliance. It’s not burdensome and individuals only need to verify their identity once.
The obvious, more practical way for most directors and PSCs is directly with CH via their mygov.uk login, or using an authorised corporate service provider (ACSP). Once you’ve verified your identity, you will be sent a personal code.
Remember that a non-compliant director or PSC could face prosecution under s167M of the Companies Act; and the company concerned could also be in breach if it failed to rectify the individual’s non-compliance.
Key takeaway
Directors and companies must take advantage of the transition period (which ends 18 November 2026) to ensure all individuals within scope verify their identity. If it is unclear whether an individual constitutes a PSC, it is important to take specialist legal advice.
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