On 26 March 2015, the Small Business, Enterprise and Employment Act (the Act) received Royal Ascent.
The Act forms part of the UK government's drive to encourage transparency in UK business, particularly relating to company ownership, and to combat unlawful activity, such as money laundering. The main provisions in the Act relate to company ownership, directorships and administration.
This article summarises the key changes and anticipated changes, as well as their implementation dates.
Company ownership: an end to bearer shares
Bearer shares are seen as controversial by the UK government because they allow for shareholder anonymity. From 26 May 2015, companies will no longer be able to issue bearer shares. Existing holders will have nine months to convert their bearer shares into non-bearer shares and join the company's share register.
Directorships: changes to the use of corporate directors
Corporate directors create opacity in company management and can mask illegal activity. However, they are mainly used for practical reasons, such as reducing administration in large company groups. The appointment of new Corporate directors will be banned from October 2016 however any corporate director in place prior to this date will be allowed to remain in place for another 12 months, with exceptions to take account of their legitimate use. These have not been finalised, but the proposed criteria for allowing a corporate director are (1) all directors of the corporate director are natural persons, and (2) their details are available on a public register.
Company administration: changes to registers and filings
One of the most significant changes under the Act is the introduction of a register of 'people with significant control' from April 2016, though this information will not need to be filed until 30 June 2016. All companies (except those listed on a regulated market) must keep the register at Companies House or the company's registered office. At least once a year, the company will be required to file the information at Companies House as part of the annual confirmation process
The register will list details of any person (corporate or natural) who holds or controls more than 25% of a company's shares or voting rights, has the power to appoint a majority of the board or has the right to exercise or actually exercises significant influence or control over the company. The holding or control may be direct or indirect, for example through another company or a trust.
Other changes to company administration include the following, which are anticipated to come into force in June 2016:
- The annual return will be replaced with a 'confirmation statement'.
- Companies can keep statutory registers at Companies House instead of their registered offices. However, if the register of members is kept at the registered office of the Company, an element of control is kept by the Company with regards to who is able to view the register.
- The statement of capital no longer needs to detail the amount unpaid on each share, only the aggregate amount.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.