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Which of the following are persons with significant control?
(1) Gradman Ltd, which owns 55% of the shares of Geraci Ltd
(2) Beth, who holds 30% of the voting rights of Meginley Ltd
(3) Ben, who owns 20% of the shares of Light Ltd
The answer given in the study hub says option B(Beth) is only correct. I’d like to know why Gradman ltd is not a psc? It holds 55% of the shares.
My understanding:
A person that holds more than 25% of the voting rights of a company
A person that owns more than 25% of the share capital of a company
A person that has the power to appoint a majority of the board of directorsApplying my understanding to the question, I would suggest that both Gradman AND Beth are persons with significant control
Note that this is an interesting question in that, if you had selected Ben with a 20% holding, then you must surely also select Beth with her 25% holding!
Silly question!
I’ve had another look at this question and particularly looked on the UK Government website
Here’s a relevant extract:
Significant influence or control – terminology
1.21. “Significant influence” and “control” are alternatives.
1.22. Where a person that can direct the activities of a company, trust or firm, this would be indicative of “control”.
1.23. Where a person can ensure that a company, trust or firm generally adopts the
activities which they desire, this would be indicative of “significant influence”.Now, if I’m interpreting this correctly, Gradman has ‘control’, Beth has ‘significant influence’
May I ask, have you typed the Study Hub question accurately? I ask because the Government’s Company Statutory Guidance does not acknowledge the expression ‘significant control’
Why? Because ‘control’ is control and is therefore automatically significant
Influence is a variable commodity and may or may not be significant.
So, on reflection, in answer to the question that you have typed, ‘Which of the following are persons with significant control? the answer must be, surely, ‘None of them!’
Since typing this last foregoing sentence, I’ve had an even deeper look into the matter! And I’m perplexed! The expressions ‘significant control’ and ‘significant influence’ appear to be loosely interchangeable and that’s bad news when trying to answer this question.
However, according to paragraph 1.22 and 1.23 above, Gradman has control and Beth has significant influence. IF you wish to accept that 55% is ‘significant control’ then that’s what Gradman has.
But under no interpretation that I can find could it be argued that Beth has any category of control. The best that Beth can aspire to is ‘significant influence’
Oh WOW! What an awful question 🙁
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