Question regarding "Person of significant control"

tomp2494

Hi.

I am director of a small flat management company which owns the freehold to my and two others flats. We are also all directors. 

We are also listed as PSC's on companies house. Is this correct? Or was the solicitor, who set the company up, just being over cautious? 

The PSC section states:

Ownership of shares – More than 25% but not more than 50%

Ownership of voting rights - More than 25% but not more than 50%

Right to appoint or remove directors

I question the above, as none of us have significant control. Everything is equal which means we need a majority in order to do anything. 

I queried this with chat gpt twice on two separate chats and it gave different advice each time which was not very helpful.

On one chat it said that I should remove everyone as no one person has significant control in a 3 with equal rights. 

The other chat said to just remove the "right to appoint or remove directors".

Any advice please? 

Woodstok2000

Significant control doesn't mean sole control.

According to hmrc:

A PSC is usually anyone who meets one (or ore) of the following:

• has more than 25% shares or voting rights in your company
• can appoint or remove a majority of directors
• can influence or control your company or trust

user1977

Do you have a concern about the fact you're all listed?

tomp2494

user1977 said:

Do you have a concern about the fact you're all listed?

Yes. We're in the process of removing one of the Directors. 

user1977

tomp2494 said:

user1977 said:

Do you have a concern about the fact you're all listed?

Yes. We're in the process of removing one of the Directors. 

But it doesn't change your actual powers amongst each other. It's merely transparency for the world at large about who is running the company.

tomp2494

user1977 said:

tomp2494 said:

user1977 said:

Do you have a concern about the fact you're all listed?

Yes. We're in the process of removing one of the Directors. 

But it doesn't change your actual powers amongst each other. It's merely transparency for the world at large about who is running the company.

OK thanks. I'll think I'll keep it as is then! 

MyRealNameToo

tomp2494 said:

Hi.

I am director of a small flat management company which owns the freehold to my and two others flats. We are also all directors. 

We are also listed as PSC's on companies house. Is this correct? Or was the solicitor, who set the company up, just being over cautious? 

The PSC section states:

Ownership of shares – More than 25% but not more than 50%

Ownership of voting rights - More than 25% but not more than 50%

Right to appoint or remove directors

I question the above, as none of us have significant control. Everything is equal which means we need a majority in order to do anything. 

I queried this with chat gpt twice on two separate chats and it gave different advice each time which was not very helpful.

On one chat it said that I should remove everyone as no one person has significant control in a 3 with equal rights. 

The other chat said to just remove the "right to appoint or remove directors".

Any advice please? 

Significant control is generally having 25% or more of the share holding, there can be some more nuanced considerations too but for this setup it's all thats needed. Remember the same rules apply to FTSE 100 companies with their thousands of shareholders along with you guys with 3 shareholders. With 33.3% of voting rights you have a significant influence compared to your retail investor that holds 10 shares in Apple of the 14.5bn shares issued. 

Its never going to happen but in principle if one of your shareholders decided to sell their shares to a load of random people any shrewd investor would want to know the fact that the two original shareholders can simply outvote them on anything because they'll have 66.7% of the votes and collectively the new shareholders only have 33.3%

Historically limited companies didnt exist and so shareholders, who could be secret, had unlimited liability. Needless to say this made raising capital more difficult and so in exchange for capping shareholder liability more information was made public about companies so in principle people can made more informed choices. Knowing who could totally change the company you own a slice of is key information.