Running a limited company in the UK involves several key roles, including Directors, Shareholders, People with Significant Control (PSCs), and in some cases, Guarantors. Each of these roles carries specific responsibilities critical to the company's success and legal compliance. In many cases, individuals or entities may hold more than one role, but each comes with unique duties that help ensure the smooth operation of the business.
This guide provides an easy-to-understand explanation of each role and their responsibilities, with a focus on how these roles interact in UK companies.
What are company directors?
A Director is responsible for the daily management and the oversight of the day-to-day operations of the company. Directors must act in the best interests of the company and its Shareholders, as outlined in the Companies Act 2006. The Companies Act 2006 is the law in the UK that provides the framework for how companies operate. It aims to make running a company clear and fair for everyone involved.
The Directors job is to manage the company's activities effectively while ensuring the business complies with legal obligations, such as filing documents with Companies House.
Key responsibilities of directors
- Managing the company’s operations: Oversee and guide the business to ensure it runs efficiently.
- Legal compliance: Ensure that necessary filings, such as annual accounts (at least a basic balance sheet and, depending on the filing requirements, additional financial statements) and confirmation statements, are submitted to Companies House on time or oversee that these tasks are completed correctly by anyone who they delegate the tasks to.
- Financial management: Handle the company’s financial responsibilities, including taxes like VAT and Corporation Tax.
- Decision-making: Make important decisions on behalf of the company and its Shareholders.
Corporate directors
A company can appoint another corporate entity as a Director, but it must also have at least one human Director. This ensures that a natural person is accountable for the company's actions. Corporate Directors are common in complex business structures, such as holding companies or subsidiaries.
Acting through a proper officer
A Proper Officer is an official representative of a company for certain functions helping to ensure that everything is done according to the law.
For tax purposes, a company acts through its proper officer, usually the Company Secretary or a person authorised to act on the company's behalf. In cases of liquidation or administration, the liquidator or administrator assumes this role.
Shareholders: The owners of the company
Shareholders are the owners of the company. They invest in the business by purchasing shares, which give them ownership rights, such as voting on significant company matters and receiving dividends if the company is profitable. The number of shares a Shareholder owns determines their level of control and influence.
Shareholder rights
- Voting rights: Shareholders can vote on major decisions, such as electing Directors.
- Dividends: They receive a share of the company’s profits if dividends are declared.
- Transfer of shares: Shares can be sold or transferred to others, allowing Shareholders to exit or reduce their ownership.
- Limited liability: Shareholders are only liable for the value of their shares, which is typically a nominal amount like £1 per share.
Corporate shareholders
A company or another corporate entity can also be a Shareholder. This is common in larger corporate structures where one company holds shares in another.
People with significant control (PSC)
A Person with Significant Control (PSC) is someone who holds significant influence or control over a company. The PSC regime was introduced to enhance transparency in UK businesses by identifying individuals or entities that have significant control over company activities.
Who qualifies as a PSC?
A person is classified as a PSC if they meet one or more of the following conditions:
- Ownership: They hold more than 25% of the company’s shares.
- Voting rights: They control more than 25% of the voting rights.
- Board control: They have the power to appoint or remove the majority of the company’s Directors.
- Significant influence: They can exert significant control over the company’s activities.
PSC vs UBO: What’s the difference?
While PSC refers to individuals with control over UK companies, the term Ultimate Beneficial Owner (UBO) is more commonly used internationally. Both concepts aim to reveal the individuals who truly control a company at the highest level, but PSC is specific to UK regulations. The PSC register ensures that those with significant influence are made publicly visible contributing to overall business transparency and anti-money laundering efforts.
Corporate PSCs
A corporate entity can also qualify as a PSC if it meets the criteria for significant control. In such cases, the individual or individuals who control the corporate PSC must be disclosed as well.
Guarantors: An alternative to shareholders
In companies limited by guarantee (typically non-profit organisations), Guarantors take the place of Shareholders. Guarantors don’t own shares but instead agree to contribute a set amount (often as little as £1) if the company is wound up.
Guarantor responsibilities
- Limited liability: A Guarantor’s liability is limited to the amount they agree to pay if the company faces financial difficulties.
- No dividends: Unlike Shareholders, Guarantors do not receive dividends since the company is typically non-profit.
- Control: Guarantors still have control over the company by voting on key decisions.
Company Secretaries: The administrative backbone
A Company Secretary is responsible for ensuring that the company complies with its legal and regulatory obligations and that accurate records are kept. Although private companies are not required to have a Company Secretary, many choose to appoint one to handle complex administrative tasks.
Key responsibilities of a company secretary
- Maintaining statutory records: Keep company registers and records up to date, including details of Directors, Shareholders and their shareholdings and PSCs.
- Filing with Companies House: Ensure that necessary filings are submitted on time.
- Organising meetings: Prepare and document meetings of the board and Shareholder meetings.
Corporate secretaries
A company can appoint a corporate entity as its Company Secretary. However, the Directors remain ultimately responsible for ensuring that the company meets its legal obligations.
Acting as the proper officer
For tax purposes, the Company Secretary is often considered the proper officer of the company, responsible for signing tax returns and official documents on behalf of the company.
Examples of UK companies with various officers’ roles
In order to understand the structure and roles within a UK limited company, let's start with the example of WOW Hydrate Limited, a UK-based company that produces and distributes innovative hydration products for athletes and fitness enthusiasts.
Directors and secretary
WOW Hydrate Limited currently has:
- 5 Active Directors responsible for managing the company’s operations, decision-making, and overall direction. One of the Directors also holds the role of Company Secretary. This means he handles both the day-to-day management as a Director and the administrative and legal responsibilities required of the Company Secretary.
- 1 Active Company Secretary who ensures the company remains compliant with legal regulations and regulatory, manages filings, and handles important paperwork.
Previous directors and secretaries
Over the years, WOW Hydrate Limited has experienced several changes in its leadership:
- 10 Former Directors have resigned.
- 1 Former Secretary has resigned.
Persons with significant control
As we mentioned earlier, Persons with Significant Control (PSCs) are individuals or entities that have major influence over the company, usually by owning a significant portion of shares or controlling voting rights. As of 23 August 2024, the company filed a PSC08 statement indicating that no one currently meets the PSC criteria. However, the company had previous PSCs:
- One entity held between 50-75% of the company’s shares and voting rights until April 2023.
- Another entity held between 25-50% of the company’s shares and voting rights until October 2019.
To better understand the concept of Persons with Significant Control (PSC), we can look at the example of E.ON Next Energy Limited. E.ON Next is part of the E.ON group, a leading energy supplier in the UK, providing renewable electricity and gas to millions of homes and businesses.
In E.ON Next’s PSC records, E.On UK Plc is listed as the main entity that controls the company. E.On UK Plc holds 75% or more of the shares and voting rights in E.ON Next Energy Limited. This means that E.On UK Plc has significant power over the company, including the ability to make major decisions, like appointing or removing directors and shaping the company’s future.
This example shows that PSCs can be companies, not just individuals. By law, UK companies must report who has significant control to keep things transparent, so it’s clear who is in charge of a business.
The importance of accurate information
Keeping accurate and up-to-date information about the individuals in these roles is crucial for several reasons:
- Legal Compliance: Companies are legally required to keep their Companies House information current and accurate.
- Business Transparency: Accurate information helps build trust with potential partners, investors, and customers.
- Anti-Money Laundering: Correct PSC information is vital for preventing financial crimes.
- Due Diligence: Investors and financial institutions rely on this information for their decision-making processes.
Frequently asked questions
Can one person be a director, shareholder, and PSC?
Yes, in many cases, a single individual can serve as a Director, Shareholder, and Person with Significant Control (PSC) of a company. This is especially common in small businesses or startups where the founder takes on multiple roles. However, it’s important to note that each of these roles comes with distinct legal responsibilities. For example, as a Director, you are responsible for managing the company, while as a Shareholder, you have ownership rights. As a PSC, you must be transparent about your level of control over the company.
Can UK companies have nominees?
Yes, UK companies can appoint Nominees to hold shares, directorships, or even act as Company Secretaries on behalf of the actual owner. A Nominee is essentially a person or entity who acts in place of someone else to conceal the identity of the actual beneficial owner. This is often used for privacy reasons but comes with legal obligations.
Nominees must still comply with Companies House requirements and report the true Person with Significant Control (PSC). The actual beneficial owner (the person who benefits from or controls the shares or directorship) must be disclosed under PSC regulations. Nominee arrangements can be legal, but they are closely monitored to prevent misuse for purposes like tax evasion or money laundering.
How to view company information on Companies House
Companies House provides a user-friendly online service where you can search for company information:
- Visit the Companies House website
- Use the 'Find company information' service
- Search by company name or number (or director/secretary name to narrow searh even further)
- Access various documents, including:
- Company overview
- Filing history
- People (officers, PSCs)
- Charges (if any)
- Insolvency information (if applicable)
What’s the difference between company members and company officers?
Company Members are the Shareholders or Guarantors who own or control the company. They have voting rights and may receive dividends (in the case of Shareholders) or exercise control through guarantees (for Guarantors). Members are the ultimate owners of the company and have the power to make major decisions, such as changing the company's constitution or appointing and removing directors, through voting at general meetings. In a company limited by shares, members are shareholders, while in a company limited by guarantee, members are guarantors who agree to contribute a nominal amount if the company is wound up.
On the other hand, Company Officers include individuals responsible for managing the company's operations, such as Directors and Company Secretaries. Officers have legal duties and responsibilities under company law. Directors are responsible for the strategic direction and management of the company, while Company Secretaries (where appointed) ensure compliance with statutory and regulatory requirements. Officers are registered with Companies House and their details are publicly available.
While Members own the company, Officers are tasked with running it and are accountable for its proper management and legal compliance.
The difference between the two lies in roles, responsibilities, and legal obligations. Company Officers (like Directors and Company Secretaries) are responsible for the company's day-to-day management, strategic decision-making, and ensuring compliance with legal and regulatory requirements. They have fiduciary duties to act in the best interests of the company and can be held personally liable for certain breaches of company law or misconduct. Officers are appointed to their positions and can be removed by the members or as specified in the company's articles of association.
Company Members (like Shareholders or Guarantors) are the owners or ultimate controllers of the company. They have financial interests in the company's success but are generally not involved in its day-to-day operations. Members have the right to attend general meetings, vote on important company matters, receive dividends (if applicable), and access certain company information. Their liability is typically limited to the amount unpaid on their shares or their guarantee amount.
In some cases, individuals can be both a Company Officer and a Member, especially in small companies where roles overlap. This is common in owner-managed businesses where the directors are also the main shareholders. However, it's important to note that the legal responsibilities associated with each role remain distinct, even when held by the same person. Additionally, in larger companies, there may be many members who are not officers, and officers who are not members, creating a clear separation between ownership and management.
