All companies trading in the UK will be affected by the Small Business, Enterprise and Employment Act 2015 (“the Act”) and directors and officers should be aware of its extensive provisions. The Act marks the single biggest change to company law since the Companies Act 2006 and will be phased in over the next 12 months.
The Act is born out of a determined desire on the part of government to improve transparency in UK companies and to reduce the administrative burden of company filing requirements. The government has also used the Act to make changes in the law relating to employment, finance, education and childcare.
Therefore, if you, or your business, fit into any of the following categories we would recommend that you contact us for further advice:
ARE YOU THE OWNER OR CONTROLLER OF A COMPANY?
In an atmosphere of increasing distrust of corporate governance since the financial crisis of 2008 the government is keen to improve the UK’s reputation as a trusted place to do business. The Act has brought in a new category of individual in company law – People with Significant Control or ‘PSCs’. PSCs must be recorded in a new, publicly accessible central register of individuals who ultimately own and control companies.
‘Significant Control’ has been defined broadly as being an individual having direct or indirect ownership/control of the company or who exercises ‘significant influence’ over the company or a holding company which meets the other criteria.
The PSC register will be publicly accessible on a central register at Companies House.
DOES YOUR COMPANY USE CORPORATE DIRECTORS OR ARE YOU AN OFFICER OF A CORPORATE DIRECTOR?
As with the provisions relating to those exercising ‘significant control’ the Act is concerned with bringing daylight into the darkest corners of corporate structures. Transparency is the object and to that end, the use of corporate directors is prohibited, with very limited exceptions.
ARE YOU ACTING AS A SHADOW DIRECTOR?
The Act brings the accountability of shadow directors into line with those of directors recorded at Companies House. Again, transparency of those exercising real control of a company is the objective.
DO YOU OWN, OR HAS YOUR COMPANY ISSUED BEARER SHARES?
Although relatively rare for UK companies these days, the Act sounds the death-knell for the ability of companies to issue bearer shares. Even bearer shares that have already been issued must be eliminated under the Act. The Act provides a mechanism for companies that have issued bearer shares to require that they be surrendered and exchanged.
REDUCTION OF RED TAPE FOR ALL COMPANIES
All companies will be affected by these provisions which, amongst other measures taken to simplify the administrative burden on directors, include the abolition of the annual return and the substitution of a requirement to submit a ‘statement of confirmation’. The idea being that the process of submitting the statement will be more straightforward than the annual return as online users of companies house will have the option of a check and confirm ‘1 click solution’.
Companies will also have the option of keeping all statutory registers on the public register at Companies House rather than maintaining their own statutory registers.
A more detailed note by Lexis is available here. If you have any queries about the Act and what it might mean for your business please contact Toby Stroh (head of department) or Tim O’Callaghan for more information.