The Department of Business and Trade issues updated guidance on the meaning of significant influence or control for the purposes of the PSC regime.

On 4 March 2026, the Department of Business and Trade (DBT) published a revised statutory guidance on the meaning of “significant influence or control” over companies, which can be accessed here. An understanding of this term can prove critical in determining whether an individual is a person with significant control (PSC) over a company – the relevance of which is discussed below.

The revised guidance reflects the fact that UK company laws no longer require companies to maintain their own PSC registers. Instead, PSC information must now be reported to, and maintained at, Companies House. Whilst the substance of the guidance itself has not changed, an appreciation of the term “significant influence or control” is more critical than ever, particularly given that PSCs are now required to verify their identities with Companies House, pursuant to the mandatory identity verification regime introduced late last year (click here for an SMB article with further information on this regime).

The DBT’s guidance applies to most registered companies (with certain exceptions, including companies listed on the UK main or regulated market). Limited liability partnerships are subject to their own guidance, published on the same date, which can be accessed here.

Am I a PSC?

To be a PSC of a company, a person must satisfy one or more of the following conditions:

• hold more than 25% of the company’s shares;
• hold more than 25% of the company’s voting rights;
• have the power to appoint or remove a majority of the company’s board;
• have the right to exercise significant influence or control over the company (Condition 4); or
• have the right to exercise significant influence or control over the activities of a trust or firm and that trust or firm meets one of the above four conditions in respect of a company (Condition 5).

A person (and, in turn, the subject company) need not be concerned with Conditions 4 or 5 if any of first three conditions apply pursuant to which they already qualify as a PSC. The DBT guidance focuses on Conditions 4 and 5.

Identifying a PSC falling within Conditions 4 or 5:

The guidance distinguishes between significant influence and control:

• Significant influence is where a person can ensure a company adopts the action they want.
• Control enables a person to direct the activities of a company.

Condition 4:

There are two ways to fall under this condition: (1) having the right to exercise significant influence or control or (2) actually exercising it.

Having the right to exercise significant influence or control typically relates to the formal rights someone holds (for example, under a shareholders’ agreement). The crucial point is possessing those rights; it is immaterial if the rights are ever exercised.

Examples may include absolute decision rights relating to:

• adopting or amending a company’s business plan;
• making any additional borrowing from lenders; or
• the grant of options under a share scheme.

Actually exercising significant influence or control looks at how the company is run in practice and not about what any formal documents dictate.

The DBT notes that relationships between the potential PSC and the company or management should be observed to see what effect those relations have on their influence or control. A PSC can be a person who can exert control through having a close relationship with the company’s senior management team, being family members or through other forms of connections.

Possible examples, cited in the guidance, include:

• shadow directors; or
• persons whose recommendations are always or almost always followed by majority shareholders (e.g. a company founder has diluted their shareholding but makes recommendations to the other shareholders on how to vote and those recommendations are almost always or always followed).

Condition 5:

This condition mirrors Condition 4 but applies strictly to trustees of a trust or members of a firm (for example, a limited partnership).

Some examples include the right to:

• direct the distribution of funds or assets; or
• direct investment decisions of the trust or firm.

Excepted roles

It is worth noting there are some roles which are excepted from both Conditions 4 and 5 and would not be standalone evidence of constituting significant influence or control – although one should always examine the broader relationship. These include, but are not limited to, persons who provide advice or direction in a professional capacity e.g.:

• accountants;
• lawyers;
• tax advisers; or
• financial advisers.

What does this mean for me?

Businesses should remain vigilant to the need to investigate what powers/rights a person holds pursuant to any documents or agreements (if any) and the actual relationships the person has with the company and/or its senior people (even where they are not a shareholder). Of course, SMB would be happy to help with any analysis concerning the potential PSC status of a person. It is important that any discovered PSCs verify their identities in accordance with the requirements of the mandatory identity verification regime (in addition to complying with other obligations in respect of such PSC status).

A PSC who does not, without reasonable excuse, duly verify their identity will commit a criminal offence punishable by fine.

For further information, please contact Kane Nosworthy, Alon Domb or your usual SMB contact.