Whether an individual has "substantial control" over a reporting company depends on the power they may exercise over a reporting company. For example, an individual will have substantial control over a reporting company if they direct, determine or exercise substantial influence over, important decisions the reporting company makes. In addition, any senior officer is deemed to have substantial control over a reporting company. Other rights or responsibilities may also constitute substantial control.
Substantial control can be established through four main avenues:
- Senior officer status: holding senior positions like President, CFO, or CEO.
- Authority in appointing or removing Officers or Directors.
- Key decision-making role: in pivotal decisions regarding the company's operations, finances, or organizational structure.
- Other forms of control: any other means by which an individual significantly influences the reporting entity.