The Small Business, Enterprise and Employment Act 2015 ("the Act") came into force on 26 March 2015 and is set to introduce some important changes to UK company law. The provisions set to have the greatest impact on business owners will include the introduction of the PSC register and the abolition of corporate directors.
The Act is to be enforced in stages, with the majority coming into force by June 2016. Our briefing note below sets out some of the key changes you should be aware of and what, if anything, you should be doing in order to comply.
PSC Register
The Act will require companies to identify and retain a public register of people with "significant control" over the company. This register must be kept up to date, as failure to do so will be deemed a criminal offence.
"Significant control" can be defined as either:
- an individual who owns or controls more than 25% of a UK company's shares/voting rights; or
- has the ability to exercise significant influence or control over the company and/or its board.
More guidance is due to be released in October 2015, with implementation stipulated for June 2016.
In the meantime, you should identify and notify those who are likely to exercise "significant control" to enable the register to be completed and filed in time for implementation.
Corporate Directors
The Act requires all directors to be natural persons (i.e. people!). All corporate directors will cease to hold office by October 2016.
This transition period should be used to identify any corporate directors in your company and find suitable replacements for them.
Annual Return
The Act removes the requirement to file an annual return and has been substituted with an annual confirmation statement. This statement is to confirm that the company has filed all the required information at Companies House within the specified period.
This will provide greater flexibility and decrease the filing onus on companies with no changes. Prior preparation shall not be necessary as it is not due to be implemented until April 2016.
Option to use the Central Registry
Companies will have the option to keep certain registers, such as registers of PSCs, members and directors, at Companies House rather than at their registered office or nominated inspection location. The registers will no longer have to be maintained separately. They will be maintained, by the Registrar of Companies, simply by filing the requisite information at Companies House, but you will have to pass all relevant changes to Companies House to avoid delays.
For example, company law dictates that an individual is not recognised as being the legal holder of shares until the register of members has been updated.
Consent to act as a director or secretary
The Act removes the "consent to act" procedure and replaces it with a statement of consent, included in the Companies House forms, which companies will agree to. Thus, from 10 October 2015 there will be no requirement for a signature on paper forms or personal authentication on electronic filing forms.
Bearer shares
As of 26 May 2015, bearer shares were abolished. Those of you who have issued bearer shares (and there will be very, very few) are asked to either convert them to registered shares or cancel them within nine months.
Directors should identify those in their company with bearer shares and convert them as soon as possible. Failure to do so will ultimately result in having to apply to court for cancellation of the shares.
Date of birth
As of the 10 October 2015, part of the date of birth of directors shall be concealed. Only the month and year shall be shown on the public register.
Accelerated strike-off
From 10 October 2015 there will be a reduction in the time taken to strike a company from the register if it has ceased to carry on business. Current law dictates that a company is to be struck off three months after the first Gazette notice. Under the Act, this period shall be decreased to two months.
Director and registered office disputes
The procedure for removing a wrongly appointed director shall be simplified and a new procedure introduced to deal with the situation where a company is using an address, for its registered office, without authorisation.
Statement of capital
From June 2016 the content of the statement of capital shall be simplified. The requirement to include the amount paid or unpaid on each share shall be removed. Instead, the total amount unpaid on all shares shall be stated.
Disclaimer
The material contained in this article is of the nature of general comment only and does not give advice on any particular matter. Recipients should not act on the basis of the information in this e-update without taking appropriate professional advice upon their own particular circumstances.
