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Layman guide to confirmation statement and persons of significant control for micro companies

The Companies House “annual return” is no more. Instead we have the “confirmation statement”. In many ways it’s similar to what it replaced…so what’s changed?

Persons of significant control (PSC)

There’s lots of big sentences with long words which make this sound much harder than it actually is. Oversimplifying a little, a PSC is anyone with >25% share ownership in your company.

First thing to say – shareholders aren’t always humans. I mention this as it’s largely why this section looks complicated. Shareholders can be either a human being, a corporate body (eg Ltd Co) or what’s known as a “legal person”. For your typical micro business, it’ll be the first option, “a person with significant control”.

Adding a PSC

We’re adding our first person. There are quite a few basic details requested. There is an option to protect the identity of PSCs from the public record. Reality is the vast majority of business owners won’t be able to do this.

It then asks for your date of birth. As with details for directors, only the month and year will be publicly available (to go some way towards making life harder for potential ID fraudsters). It also requests Nationality.

Correspondence address – this will be publicly available. If you’re concerned about data privacy, you may want to make this somewhere other than your home address. Having said that, the majority of small Ltd Co owners will use their home address for this.

Home address – your actual home address is separately requested. This won’t be publicly available.  Your country of residence will be publicly available.

Nature of control

This is where again it can look more complicated than it really is.

Ownership of shares –> The person holds shares, then choose relevant %. Note that if the person owns exactly 25%, 50%, or 75% they fit into the lower category (ie 50% exactly is “more than 25% but not more than 50% shares”, it’s not “more than 50% but not more than 75% of shares”).

Ownership of voting rights –> The person holds voting rights. Unless you’ve got a fancy share structure where only some shares hold voting rights (wouldn’t recommend this for a simple micro company) then this will exactly mirror the shares.

Right to appoint or remove the majority of the board of directors. As suggested earlier assuming it’s a human shareholder, the 2nd and 3rd options aren’t relevant. It’s just whether the 1st is true or not. In practice anyone controlling the company (ie >50% shares) can appoint or remove directors. For micro companies the directors and shareholders are likely to be the same people (or spouses/similar), so this is more a technicality to put on the form rather than something you need to be concerned about.

Has significant influence or control (updated 24 Nov 2016) it seems if any of the above boxes have been ticked, this now needs to be left blank. If you do tick the top option whilst also confirming that the individual holds shares/voting rights etc, the Cos Hse form seems to give an error message. Simply leave this one blank. We think it’s only relevant if none of the above more specific reasons apply.

When did this person become a PSC?

Logic might suggest it would either be the date of incorporation, or if it’s someone who only received shares later than that date, the date they went over 25% share ownership. However, the form will only accept a date on/after 6 April 2016.

I’d therefore suggest you choose 6 April 2016, unless you only obtained your shares after that date.

Rest of form

After that, the rest of the confirmation statement is no different to the annual return. Check the registered office address is still valid and shareholders match, but otherwise typically just a case of clicking confirm/next half a dozen times then paying a £13 fee to Companies House.

Unpaid share capital – something that confuses a few people. Just enter £0 here, on the basis you will have paid for your share (if not physically putting the £1 or £100 in, it’ll likely have been dealt with via director loan account.

Shortened deadline

Oh…and whilst you had 28 days to file the annual return, you have just 14 days to file the confirmation statement. Having said that, there was no financial penalty for late filing of an annual return, and the same seems to be true for the confirmation statement. As with the annual return though, if left too long Companies House will start threatening striking off action.

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