The Small Business, Enterprise and Employment Act (Act) received Royal Assent in March 2015. It makes many changes in a bid to improve transparency and accountability of companies as well as simplifying company law and reducing regulation for smaller businesses.
The Act implemented a number of significant changes some of which are already in force and others which will come into force during 2016. This article covers the main changes of the Act.
Changes in force
The ability of a company to issue bearer shares was abolished in May 2015. There is a nine month transition period, ending in February 2016, to replace bearer shares with registered shares after which time they will be cancelled. From May 2015 the general duties of directors also apply to shadow directors who are not formally appointed as directors but on whose directions the board acts.
In October 2015 the consent procedure for new directors and company secretaries changed. Now the onus is on the company to inform Companies House that the person has consented to act. Companies House then contacts each new director (but not secretaries) to confirm their consent. In order to deter identity fraud the day of the date of birth of directors will no longer appear on the public register.
Since October 2015 provisions to amend the strike-off process for companies came into force and since December Companies House will be able to amend the registered office of the company where the address is disputed.
Early this year
As well as the usual register of members, directors, secretary and directors’ addresses, all unquoted companies and LLPs will need to keep a register of persons with significant control ("PSCs"). Generally, such persons include individuals and companies who hold more than 25 per cent. of the company’s shares or voting rights or have the power to appoint or remove a majority of the board. Companies and LLPs will have to maintain a register of PSCs from April 2016. Companies will have to file the information at Companies House from 30 June 2016. Similar to the provisions for directors, the day of the date of birth of individuals on the PSC register will not appear on the public register. Changes simplifying the director disqualification process are expected to come into force in June 2016.
Other changes include replacing annual returns with annual confirmation statements from June 2016. These require the company to confirm the information held at Companies House and file any changes rather than filing a full annual return every year. In addition, the statement of capital will change from a statement of all the paid and unpaid amounts on each share to a statement only of the aggregate amount unpaid on the total number of shares.
From June 2016 private companies will be able to opt to keep their registers of shareholders, directors, secretaries and PSCs at Companies House rather than keep the registers themselves.
Last but not least
Going forward the use of corporate directors will be prohibited with the current implementation date of October 2016. Exceptions to the ban are expected and we are waiting for guidance on what these will be.
There are a number of changes which are now in force or which will come into force which will impact almost every UK company. Each company should put their house in order in good time. Companies and LLPs should now be considering the new PSC register and whether they have one or more PSCs and, if they do, ensure they can be identified and data collected.
Ioana is a knowledge development lawyer in our corporate practice, with responsibility for developing our corporate knowledge resources and legal training. She has a broad range of international corporate finance experience, including public company takeovers and private company sales and acquisitions.