On 26 March the Small Business, Enterprise and Employment Bill received royal assent, introducing a number of measures affecting companies designed to:
- reduce red tape whilst increasing the quality of information on the public register; and
- enhance transparency and ensure the UK is seen as a trusted and fair place to do business.
The changes will include amendments to both the Companies Act 2006 and insolvency legislation and implementation will take place in 3 stages (with the highest impacting changes delivered in the final stage) within an 18 month period following implementation of the Small Business, Enterprise and Employment Act 2015.
2 months after the Act was passed
Abolition of bearer shares
All existing bearer shares will need to be surrendered within a 9 month surrender period and companies will need to provide notice to bearer shareholders notifying them of their rights to surrender and the consequences for failing to do so. In addition, a company will be entitled to amend provisions under its articles of association (authorising the issue of issue bearer shares) without having to pass a special resolution or complying with any relevant entrenchment provisions.
The general duties of directors under sections 170 to 177 of the Companies Act 2006 will apply to shadow directors to the extent they are capable of applying.
Prohibition on appointment of corporate directors
There will be a general prohibition on the appointment of corporate directors and any appointment made in contravention of this restriction is void and it will be an offence to breach the prohibition. There will be limited exceptions to this prohibition the nature of which have been subject to on-going consultation. The Department for Business, Innovation and Skills has proposed that the exception should only be available if all of the directors of the proposed corporate director are natural persons and the law under which the corporate director is established requires details of its directors to be maintained on a publicly accessible register. Companies will need to take action to explain to Companies House how any corporate directors fall within the exception or confirm the termination of corporate director appointments.
Director filing and registration requirements
Companies will now be required to make a statement that a newly appointed director has consented to act (currently the appointee is required to provide such consent). Newly appointed directors will be contacted by Companies House to make them aware of their appointment and be provided with information about their roles and duties as a director. These measures are designed to reduce fraudulent appointments.
Registered office disputes
In the event of a dispute involving a registered office address, Companies House will have the power to change the registered office address of a company which cannot provide proof of eligibility / authorisation to use such address.
The amount of time it will take for a company to be dissolved (whether voluntary or non-voluntary) will be reduced from three to two months after publication of notice in the Gazette.
Personal data suppression
Only month and year of birth will be visible on the public register for directors and people with significant control.
People with significant control (PSC)
To facilitate clarity of ownership and control, companies will be required to maintain a 'PSC Register'. The five "specified conditions" that constitute "significant control" are:
- direct / indirect ownership of +25% of a company's shares;
- direct / indirect control of +25% of a company's voting rights;
- direct / indirect right to appoint / remove a majority of the board of directors;
- exercise / right to exercise significant influence or control over a company; and/or
- exercise / right to exercise significant influence or control over activities of a trust or firm which itself meet one or more of the first four conditions.
The scope of these conditions has been left intentionally broad in an attempt to cover the different ways a person may exert control over a company, including all structures of beneficial ownership.
Check and confirm
As a replacement to the annual return, companies will be required to 'check and confirm' company information and notify Companies House of any changes (if necessary) at least once every 12 months.
People with significant control (PSC)
Every company will need to file its PSC Register at Companies House (which will be available for public inspection) and keep it updated on a 'check and confirm' basis.
Optional additional information
Companies will have the option to provide certain categories of additional information (e.g. number of employees, operating locations, description of main activities) to the Registrar which will be visible at Companies House.
Private companies will have the option to maintain certain information on the public register instead of statutory registers. This will apply to the register of members, directors, secretaries, directors' residential addresses. Companies House will charge for this service.
Statement of capital
Provisions under the Companies Act 2006 relating to the statement of capital will be amended to remove the requirement for companies to include the amount paid up and unpaid on each share. Companies will instead be required to specify the aggregate amount unpaid on the total number of issued shares.
The disqualified directors regime will be updated and improved to allow a director's overseas misconduct to be taken into account in disqualification proceedings and to provide for directors to compensate those who have suffered loss as a result of their misconduct.
For further details of the Small Business, Enterprise and Employment Act 2015 click here.
Changes at Companies House
Changes under the Small Business, Enterprise and Employment Act 2015 will be facilitated by improvements to Companies House online facilities. The three existing Companies House services, Webfiling, Webcheck and Companies House Direct will be replaced by one unified online service: The Companies House Service. During its implementation phase Webfiling, Webcheck and Companies House Direct will continue to operate alongside the new service.
Notable changes to the existing offering include:
- a move away from the subscription-based Companies House Direct model to a free of charge service;
- free of charge access to ALL document images (including mortgage charges);
- a move away from form-based filing to 'click and confirm' procedures making it easier to maintain company information; and
- a more modern and user-friendly interface which will make searching easier and quicker.
To view the Companies House Service beta site click here.
The Small Business, Enterprise and Employment Act 2015 contains a number of measures which represent significant changes for companies and Companies House customers. Many of the changes are expected to be welcomed, particularly by SMEs which should find benefit from improved efficiencies to the company secretarial function.
Company owners and managers should become familiar with the implementation timetable now and take appropriate steps to ensure compliance under the new regime with particular consideration to the obligation to maintain a PSC Register. Whilst this reform represents a significant step forward in company transparency in the UK it is a new concept in UK company law and companies need to be fully aware of these obligations before PSC Registers become available for public inspection in April 2016.