Changing a company PSC

[Linkin]

Hi All,

Does anyone have some experience of changing a Ltd company PSC?

It's not straightforward, let me explain a little....
I have a shareholding in a business, whereby the existing PSC is as useful as a chocolate teapot. The PSC's shareholding is now 24% (it was higher).
Without consultation they changed the Registered Address to their home address, so any written correspondence from companies house will go to that address.
In a nutshell, i'd like to forcibly change the PSC and drive the business forward. If the current PSC remains in place, that won't happen.


Thanks in advance for any suggestions
Linkin

[akirk]

Linkin said:

Hi All,

Does anyone have some experience of changing a Ltd company PSC?

It's not straightforward, let me explain a little....
I have a shareholding in a business, whereby the existing PSC is as useful as a chocolate teapot. The PSC's shareholding is now 24% (it was higher).
Without consultation they changed the Registered Address to their home address, so any written correspondence from companies house will go to that address.
In a nutshell, i'd like to forcibly change the PSC and drive the business forward. If the current PSC remains in place, that won't happen.


Thanks in advance for any suggestions
Linkin

I think there is some confusion here...

PSC is a person with significant control
It is not a role - it is a simple descriptor for anyone / everyone who may have controlling influence in how a company runs.
It does not have to be share-holding related, for example a landlord who owns a critical building or the holder of a patent on which the company relies could be a PSC.

So, the fact that they are labelled as a PSC is irrelevant.
There is no such thing as 'the existing PSC' as though only one at a time exists

Shareholdings give you votes (depending on the company setup / classes of shares and their relative rights) - ultimately those votes allow you to do certain things such as electing directors etc. Generally speaking the directors will then run the company day to day.

So - registered address can be anywhere, and the decision for its location is the company's decision - therefore usually a board decision - the form (AD01) - or online filing to change it can be authorised by any of a number of roles (c.f. form) which generally comes down to a director or company secretary in a live company. So who made the decision and who signed the form to change it / authorised it online?

Not sure what you are really trying to do - you can't change a PSC (they are that by nature of their level of influence), so are you saying that basically this person with 24% of the shareholding is blocking the company development? If so, then it is up to the holders of the remaining 76% of the shares to sort it out...

[Linkin]

Thanks for the quick reply.

Yes, in essence the person who is the PSC and has 24% of the shareholding is restricting the growth.
The PSC loves to have 'control' but has had and will have little or no influence in driving the business forward.

The remaining 76% shareholders (2) would be happy to collaborate to sort things out, but i'm not sure how....

[akirk]

if there are only two other shareholders who hold 76% then either:
- both hold 38%
- one holds less and one holds more.

If the latter and the one who holds more has 50%+ they can effectively do what they want with the business as in any vote they will always win!
Regardless, if you are both happy to work together and are both in agreement that the other shareholder is causing issues, then do whatever you need to do, you own the majority of the company...

https://www.lawble.co.uk/shareholder-rights/
Is an overview of what rights different shareholders have - clearly anything you do has to be done legally - but the person you are concerned about has very little power - they can request a general meeting / can block one called at short notice / can request that the accounts are audited / can call a poll vote. - none of that allows them unilateral authority to do anything else...

Shareholders don't run the company - they appoint those who do (can be the same people!)
As you have a majority shareholding between the other two of you, you can simply:
- call a general meeting at which you can
- choose who are directors (remove the person if they are)
- choose who if anyone is company secretary
- having reshaped the board, you can call a board meeting at which:
- you change the company address to where you want it
- make whatever decisions you feel are needed to make the company succeed

NB
All of this has to be done within the framework of general company law (pretty easy with those shareholdings)
All of this has to be done within the framework of your company Articles of Association - but if they block you, a special resolution can change them and at 24% of shares he can't stop a special resolution (would need 25%+)

You don't say what this person's role is / why they are doing what they want - you may have the legal power to do what you want, but if they play a critical daily role in the business and you upset them you could still kill the business! So common sense needs to apply... I presume that they are currently a director / company secretary or the change of address might not have been valid - so if they are, you need to ask why they are doing what they are doing / what the outcome will be of your decisions and the steps you take etc...

If in doubt, take legal advice

[Linkin]

The remaining 76% is shared 38/38

Great, thanks very much for the advice, much appreciated.

Linkin

[akirk]

Linkin said:

The remaining 76% is shared 38/38

Great, thanks very much for the advice, much appreciated.

Linkin

In which case - why are you letting a minority shareholder dictate?!
either of you has more power - together you have pretty much absolute power - if your Articles of Association are based on the standard ones that most people default to when setting up a business, then you should have no issues - if they have been changed then make sure you comply!

[Linkin]

Absolutely agree!
There are reasons, of course, but I'm all out of patience now and just needed a steer on the processes you've mentioned.

In my main business i have 100% shareholding and i run the business. No issues there!

One more question.
Regarding General Meetings and Board Meetings, what if they refuse to attend, or have excuses lined up not to attend?
Do you know if they can they be done remotely or can decisions be exercised without their attendance?

Linkin

[MustangGT]

On the original question I would also think that both 38% shareholders should be included on the PSC register.

[akirk]

Linkin said:

Absolutely agree!
There are reasons, of course, but I'm all out of patience now and just needed a steer on the processes you've mentioned.

In my main business i have 100% shareholding and i run the business. No issues there!

One more question.
Regarding General Meetings and Board Meetings, what if they refuse to attend, or have excuses lined up not to attend?
Do you know if they can they be done remotely or can decisions be exercised without their attendance?

Linkin

depends on how your business is set up - but if I buy shares in British Gas and don't turn up at their AGM they still carry on operating!
- generally speaking a minority shareholder not turning up doesn't influence the outcome of a general meeting - so pass whatever resolutions you wish... you still need to give appropriate notice of the meeting and the resolutions because they can block a short-notice meeting...
- generally speaking a board meeting might have a quorum to meet (i.e. needs 6 out of 9 directors etc.) but if not, then it might be legal for just one to meet - all depends on your Articles of Association and whether they impose any restrictions or requirements - again, you need to comply with the relevant timescales to send out agendas etc.
- voting at a board meeting is simply a show of hands - i.e. one vote per person there - there may be detail in the articles on what do to if there is a tie (e.g. casting vote for the chairman). It has nothing at that point to do with shareholdings.

Shareholders appoint the board, the board runs the company.

There are though some questions - why is the person concerned a director if you have issues - remove them. If they need to be a director, then they still would not have a majority on the board if there are two others - though they would have a legal right to commit the company in a number of ways, f you don't want that - remove them.

There is a more fundamental set of questions:
- why does this person have 24% of the shareholding - presumably they at some point had value to the business?
- why did they previously have more % of the shareholding and why was it reduced?
- why do they feel that they need to be in control when they are a minority shareholding and both the others can outvote them?
- what value do they bring to the business?
- what are the consequences of making change and removing power from them?

Is this a situation where it used to be their business, being bought out / transferred, but they think they are still in control?

Ultimately, the two majority shareholders have all the power - why don't they sit down with the 24% shareholder and have a warning conversation about authority and not overstepping the boundary? You can force all sorts of things, but it will have relationship consequences...

[Linkin]

Thanks again for the advice.
I have a plan.....