This short note answers a simple question for anyone reading the accounts: who is in control? For most owner-managed companies the answer is the majority shareholder.
What this note shows
The note identifies the party that controls the company — normally whoever holds more than half the voting shares, directly or through another company.
- Owned by a parent company: small company accounts should give the name of the parent undertaking (and where it is registered). If the parent prepares group accounts, give the parent's name and where copies of those accounts can be obtained.
- Controlled by an individual: naming the ultimate controlling party is one of the related party disclosures that FRS 102 Section 1A encourages small companies to give rather than requires. Most accountants include it because it explains the related party note.
- No one has control: for example two unconnected 50% shareholders. You can say there is no single controlling party.
The note is not available in FRS 105 micro-entity accounts.
Where the information comes from
Nothing is taken from the trial balance. Use the company's register of members or the persons with significant control (PSC) register at Companies House. The percentage you state should agree with the shares shown in the share capital note.
Completing the note in Tax Optimiser
- Open the period, choose View Accounts, then Notes.
- Select Controlling party and set Show this note in the accounts to Yes.
- Click Use Template, choose the wording and fill in the values you are asked for, or type your own text.
- Click Save changes.
Wording templates
- Controlled by an individual — names the controlling shareholder and their percentage. The director's name is filled in automatically (change it if the controlling shareholder is someone else); asks for {{Shareholding}}.
- Controlled by a parent company — names the immediate and ultimate parent undertaking. Asks for {{ParentName}} and {{Country}}. If the immediate and ultimate parents are different companies, edit the sentence to name both.
- No single controlling party — states that, in the directors' opinion, there is no single ultimate controlling party.
How it appears in the accounts
The note prints as one paragraph under the heading “Controlling party”.
Frequently asked questions
Do small companies have to disclose their ultimate controlling party?
Naming an ultimate controlling individual is encouraged rather than required under FRS 102 Section 1A. Details of a parent company should be given where the company is a subsidiary.
Who is the controlling party if two directors each own 50%?
Neither has control on their own, so use the “No single controlling party” template, unless they act together under an agreement.
Is the controlling party the same as a person with significant control (PSC)?
Not always. A PSC can hold as little as 25%; control for accounts purposes normally means more than 50% of the votes. A 75% shareholder, as in the demo, is both.
What if the company is owned by a holding company that is owned by an individual?
Name the parent company, and you can add a sentence naming the individual who controls the parent as the ultimate controlling party.