I am reaching out to other funders to ask what their approach is when it comes to conducting due diligence on CICs and other charitable companies with regards to the Persons with Significant Control register.

We conduct a check on the number of Directors, with a requirement that there are a minimum of three unrelated Directors. However, we have recently noticed an increase in the number of charitable companies who may meet this requirement but who also have one or two people on the Persons with Significant Control register. In my experience the nature of the control is sometimes stated (e.g. % voting rights or the right to appoint or remove directors) but other times is listed as, 'Has significant influence or control'.

In order to promote good governance, it seems that the PSC list should mirror the approach required by a minimum Trustee or Director number i.e. a charitable company should either have no persons with significant control, or have at least three who share equal rights. It is my understanding that a Director who may have most of the voting rights according to the PSC list could, in theory, out-vote the other Directors which to some extent nullifies good governance promoted through the the requirement to have a minimum of three Directors. Sometimes this seems contradictory to what is in the organisation's governing document, but more often voting rights are not so explicitly addressed within it.

However, I would like to know if this is an accurate understanding and also the approach of other funders.

I have two questions for funders:
1) What are your requirements with regards to the Persons with Significant Control list when conducting due diligence?
2) What are the reasons that a charitable company would choose to have a Person with Significant Control?

Thank you for any help!