UK PSC Register: Essential Beneficial Ownership Reporting Guide for Startups and Founders

After a funding round closes or a key employee exercises share options, updating your cap table is the top priority. However, these events also trigger a crucial and often-overlooked legal step: updating your company’s list of ‘People with Significant Control’. Neglecting this company ownership disclosure can stall your next due diligence process, a risk no UK startup can afford.

For a comprehensive schedule of all corporate filings, see the Reporting Obligations hub.

What Is a PSC Register? A Core Component of UK Business Transparency

The PSC register is not just internal paperwork; it is a fundamental part of UK corporate governance. The People with Significant Control (PSC) register is a public record of who ultimately owns and controls your company. Its purpose is to make corporate ownership structures transparent to help prevent illicit activities. Maintaining an accurate PSC register is a legal requirement for all UK private limited companies.

It is essential to distinguish between your internal company registers and the public filing at Companies House. Your company must maintain its own private statutory PSC register. The information from this internal record is then used to update the public register. Both must be accurate and synchronised, but they are two distinct records that require separate actions to update.

How to Identify a PSC: The Five Conditions for Significant Control

Pinpointing who qualifies as a PSC is often the first hurdle for founders. The rules are designed to identify the ultimate beneficial owners, not just the names on a shareholder list. An individual or entity is a PSC if they meet at least one of five conditions. The two most common are:

1. Holding more than 25% of the company's shares.
2. Holding more than 25% of the company's voting rights.

These first two conditions cover most early-stage startup scenarios. However, three other conditions can apply, particularly as investor agreements become more complex:

• Holding the right to appoint or remove a majority of the board of directors.
• Otherwise having the right to exercise, or actually exercising, significant influence or control over the company.
• Holding the right to exercise significant influence or control over a trust or firm that would meet one of the first four conditions if it were an individual.

Let’s apply these conditions to a typical startup journey:

• Founders: At incorporation, co-founders holding equal equity that exceeds the threshold (e.g., two founders with 50% each or three with 33.3% each) will all be PSCs.
• Angel Investors: A single angel investor who contributes a large sum in a pre-seed round could easily cross the 25% share threshold, making them a PSC.
• VC Funds: When an institutional investor leads a round, the dynamic changes. If an entity like a venture capital fund or a holding company meets one of the conditions, it is listed as a 'Relevant Legal Entity' (RLE). This means the fund itself is noted on the register, not necessarily the individual partners within it.

A Step-by-Step Guide on How to Update Your PSC Register

Once you have identified your PSCs and RLEs, the process for significant control reporting is straightforward but demands attention to detail. What founders find actually works is breaking the task down into a clear, repeatable workflow after any ownership change.

1. Identify and Notify: Immediately after an event that changes your ownership structure, review your cap table against the five PSC conditions. You must then inform the individual or entity that they meet the criteria and that you require their details for the register.
2. Gather Required Information: You must collect specific, legally mandated details. The required information for each PSC includes their full name, date of birth, nationality, country of residence, service address, and residential address. For an RLE, you need its name, registered office, legal form, and governing law.
3. Protect Personal Data: Founders are often concerned about the privacy implications of this step. You can reassure your PSCs that while their information is legally required for company ownership disclosure, a PSC's residential address is not made public. The Companies House register will only display their service address, which can be the company's registered office.
4. Update Your Internal Register: The first legal step is to record all changes in your company's own statutory PSC register. This could be a dedicated spreadsheet or managed via a cap table platform, but it must be updated promptly.
5. File with Companies House: After updating your internal records, you must then file the same changes with Companies House to update the public record. This is a separate action and is crucial for maintaining UK company compliance.

Meeting Companies House Obligations: The 14 + 14 Day Rule

The most common failure point for startups is not the initial setup, but ongoing maintenance. The legal framework has strict timelines that can be difficult to manage during busy periods. Companies have 14 days to update their internal PSC register after a change occurs.

This ‘change’ could be a share transfer, a large option exercise, or the allotment of new shares in a funding round. See our guide on share capital filing for details on the SH01 form and related steps. The clock starts the moment the company has knowledge of the change. After updating the internal register, you have another 14 days to file the change with Companies House.

This '14 + 14 day' rule is especially challenging during the organised chaos of closing a funding round. With documents being signed and funds moving, updating PSC information can easily fall through the cracks. Founders, who are already stretched thin, must remember this administrative task amidst their most critical operational duties. A clear post-closing checklist is essential for making this process routine.

The Real Risk of an Outdated PSC Register: Due Diligence Delays

While the Companies Act 2006 establishes penalties for non-compliance, the more immediate and damaging risk for a growing startup is a stalled investment round. A messy PSC register is a major red flag for investors and their legal teams.

We see this scenario repeatedly: a UK SaaS startup is finalising its Series A term sheet. The investor's legal team begins due diligence and flags that the PSC register on Companies House is two years out of date. It lists only the two co-founders, failing to include the seed-stage fund that now holds 28% of the company. The due diligence process is halted. The round is delayed by a week as the founder scrambles to get the RLE details from the seed fund, update the internal register, and rush the filings. This avoidable error adds stress and erodes investor confidence at a critical moment.

Building a Robust Process for Your Company Ownership Disclosure

Staying on top of your PSC register requirements is a matter of process, not complexity. For a founder-led team without a full-time finance or legal function, embedding these steps into your operations is key to smooth scaling and successful fundraising.

• Audit Your Register Now: Compare your current Companies House filing with your latest cap table. Identify any discrepancies in your company ownership disclosure and correct them immediately.
• Create a Trigger-Based Process: Make PSC updates a non-negotiable checklist item for any event affecting share ownership. This includes funding rounds, share transfers, and significant option exercises.
• Assign Clear Ownership: Decide who is responsible for updating PSC information. It could be a CEO, a head of operations, or your external accountant. The key is that it is someone's explicit responsibility.
• Leverage Your Tools: While spreadsheets can work early on, cap table management platforms can help flag potential PSC changes automatically. However, remember the tool is an aid; the legal responsibility for filing remains with the company's directors. For all recurring filings, see the Reporting Obligations guide.

Frequently Asked Questions

Q: What is the difference between a shareholder and a Person with Significant Control (PSC)?
A: A shareholder owns shares in a company, but not all shareholders are PSCs. A PSC is an individual or entity that meets specific conditions of control, such as owning over 25% of shares or voting rights. It is possible to be a PSC without being a direct shareholder.

Q: Do employees with share options count as PSCs?
A: Generally, holding share options alone does not make an employee a PSC. They typically become a potential PSC only after they exercise their options and the resulting shareholding crosses the 25% threshold. This is why significant option exercises must trigger a review of your PSC register.

Q: What should a company do if a person refuses to provide their PSC information?
A: UK companies have a legal duty to take reasonable steps to identify PSCs and obtain their details. If a person fails to comply with a notice requesting information, the company can issue a restrictions notice, which effectively freezes their interest so shares cannot be sold or voted on.

Q: Is it possible for a company to have no PSCs?
A: Yes, it is possible, though less common for early-stage startups. If no individual or relevant legal entity meets any of the five conditions of significant control, the company must still update its register to state this fact. For example, a company with five equal founders each holding 20% would have no PSCs.