Does a residents' company have a person with significant control? The 25% test, worked for 3, 4 and 40 flats

A managing agent takes on the company secretary role for a residents' management company (RMC) of six flats. At the first confirmation statement a question comes up that was not in the handover pack: who are the people with significant control? In a block where every flat owner has one share it is easy to assume the answer is "all of them", or "none". The figures decide it.

The test on GOV.UK

GOV.UK describes a person with significant control (PSC) as usually anyone who:

• has more than 25% of shares or voting rights in the company;
• can appoint or remove a majority of directors; or
• can influence or control the company or a trust.

The page says the third limb "will only apply in limited circumstances" and sends readers to the full guidance for it, which I did not read. The company must identify its PSC and tell Companies House, and its PSC information "cannot be blank". If there is none, the company registers a statement explaining why.

The shares test by size of block

In many RMCs each flat owner holds one share, with one vote. If that is the case, the test is arithmetic.

The line between three flats and four is the one that catches people. At four, each member holds exactly 25%, and "more than 25%" is not met. A member who owns two flats in a four-flat block holds 50% and is a PSC; so is one with two of six flats, at 33.3%.

The two things the table does not show

• Share structures differ. Some RMCs have shares held by a freeholder, a nominee, or the managing agent, or have no shares at all because the company is limited by guarantee. The test then looks at votes and rights, not flats. Read the articles.
• A person who can appoint a majority of directors. A freeholder with a right to appoint directors is a PSC on the second limb whatever their shares. The articles of association are the document to read.

The page I read does not mention residents' management companies or exemptions, so I have not said that any apply.

The duty and its clock

The company must keep the information current. Changes are reported to Companies House within 14 days of confirming them. A new director who joins, or a member who sells a flat and passes the share on, can change the answer in a block of three or four flats. That is the same 14 days as in our note on a director's resignation.

GOV.UK also says that refusing to provide PSC information is a criminal offence, and that people who do not respond to notices within a calendar month or give false information could get a two-year prison sentence, a fine or both. An agent who files for the company should have the evidence on file.

Agent's checklist

1. Read the articles and the register of members. Count shares and votes per member.
2. Run the 25% test. Record the sum.
3. Check who can appoint directors. Note any such right.
4. File the PSC information or the statement. Do not leave it blank.
5. Diary the 14 days for every change of director or member.

This belongs with the rest of the yearly company filings: the accounts deadline and late penalties, the director identity checks and the AGM notice rules.

Overlyft builds AI staff who join your block management team, read each company's register of members, run the 25% test for every RMC on the list and flag the ones with a PSC or a change due, for the manager to check before anything is filed.

This is general information, not legal advice. Check the company's articles and GOV.UK before you file.