Person with Significant Control (PSC) Guidance 2026: What Companies Need to Know - GBH Law
The UK Government has recently released draft updated statutory guidance on the meaning of “significant influence or control” under the PSC regime.
Although the legal tests themselves remain unchanged, the new guidance sets expectations around how companies assess, document, and justify who is made a PSC, particularly in complex or judgement-based scenarios. This update is the most substantial clarification of PSC expectations since the regime was introduced.
Why Has the Guidance Been Updated?
The refreshed guidance aims to:
- Help companies identify PSCs who fall outside the traditional ownership or voting thresholds
- Improve consistency and quality of PSC assessments
- Reflect reforms introduced by the Economic Crime and Corporate Transparency Act 2023, including removal of local PSC registers
- Address long-standing inconsistencies in the interpretation of “significant influence or control”
Historically, two companies with very similar facts could reach very different conclusions. The new guidance seeks to narrow this gap.
Where This Guidance Fits: The PSC Conditions
A person qualifies as a PSC if they meet any of the five statutory conditions, including:
- Holding more than 25% of shares (directly or indirectly)
- Holding more than 25% of voting rights
- Having the right to appoint or remove a majority of the board
- Having or exercising significant influence or control over the company
- Having or exercising influence or control over a trust or non-legal entity that itself controls the company
The updates relate mainly to Conditions 4 and 5, where PSC status depends on judgement rather than clear numerical thresholds. These assessments often require detailed analysis.
How PSC Assessments Have Worked To Date
Traditionally, where the ownership/voting thresholds weren’t met, companies would review: articles, shareholder agreements, and other constitutional documents, veto and consent rights as well as informal or de facto influence over management decisions
However, the level of documentation varied widely across businesses. Some prepared full legal memoranda whereas others relied on informal reasoning. This inconsistency has led to conclusions being harder to justify, particularly during audits, transactions, or regulatory reviews.
What the New Guidance Changes
The legal tests for establishing significant influence or control remain the same, but the approach to applying them becomes more structured. The guidance seeks to identify two clear assessment routes.
Companies must now actively consider:
- Rights-based influence or control
- Behaviour-based influence or control
This distinction is one of the most important developments.
What are Rights-Based Indicators of Significant Influence or Control?
These typically include:
- Strategic veto rights that shape the direction of the business
- The ability to appoint or remove senior leadership
- Contractual rights that go beyond normal minority protections
- Rights embedded in side agreements or other non-constitutional documents
This is particularly relevant in private equity structures, joint ventures, and minority investor setups, where vetoes often go further than standard protections.
What are Behaviour-Based Indicators?
The guidance also emphasises that influence can arise even without formal legal rights.
Examples include:
- Regularly shaping or directing board decisions
- Recommendations that the board almost always follows
- Repeated reliance on an individual’s expertise or judgement
- Influence exercised through informal or off-book channels
It is important to note that a person does not need to influence every decision, shaping key strategic matters can be sufficient.
Excepted Roles (But Not Automatically Excluded)
The guidance also clarifies that certain roles usually do not create PSCs:
- Professional advisers
- Directors acting solely in their directorial role
- Employees acting in the course of employment
- Lenders, suppliers, customers, regulators
However, these roles are not blanket exemptions. A person in one of these roles can still be a PSC if, based on the facts, they exert genuine influence or control.
Situations That Require Particular Attention
Certain scenarios are now flagged as high-risk or judgement-heavy, including:
- Minority shareholders with extensive consent or veto rights
- Founders retaining informal authority after dilution
- Group companies that are centrally managed
- Asymmetric governance arrangements in joint ventures
- Historical assessments based on informal or undocumented reasoning
These situations may require reassessing past PSC conclusions.
Practical Steps for Companies
The draft guidance indicates a clear move toward more rigorous, evidence-based assessments. Companies should take the opportunity to revisit any PSC conclusions that involve significant influence or control, ensuring that both rights-based and behaviour-based reasoning are properly documented. This analysis should be written, dated and securely stored, and applied consistently. In situations where conclusions are finely balanced, well-structured and well-reasoned justification will now be essential.
What Happens Next?
The guidance will become authoritative once approved by Parliament. There is no immediate need to re-file PSC information, however, future filings and annual confirmations should reflect the clarified approach and companies should monitor the progression of the guidance.
Even in draft form, it provides clear insight into the direction of travel and expected governance standards.
The updated PSC guidance doesn’t change who must be identified, but clarifies how companies are expected to reach and evidence those conclusions. The emphasis is on consistency, transparency, and well-supported reasoning.
If you would like to discuss how the changes may impact your business, please get in touch with our Corporate team.