UK: The Small Business, Enterprise And Employment Act

Last Updated: 27 May 2015
Article by Rachel Anthony and Sarah Lawson

Following Parliamentary approval in March 2015, there has been a level of uncertainty around the implementation timeline for certain company law and insolvency provisions. In particular, many of the changes to the Insolvency Act 1986 will come into force without transitional provisions and so will apply automatically to existing insolvency proceedings.

We have developed a timeline setting out key dates and changes which have been published to date, as well dates for the future. We will, of course, provide confirmation and updates as and when further guidance is published.

 Implementation Timeline

What will change?

 Where?  Amendments
Effective 26 May
Creditors can extend administration period for longer S127 Consensual extension of an administration is increased to one year, from six months

Amends para. 76(2) of Schedule B1 to the Insolvency Act 1986

Administrators can distribute prescribed part without court's approval

S128(2) Carve-out created from the usual restriction placed on administrators making distributions to unsecured creditors

Amends para. 65(3) of Schedule B1 to the Insolvency Act 1986

Administrators cannot put company into CVL using para. 83 procedure if just to distribute the prescribed part S128(3) Limits the use of a CVL solely for prescribed part distributions and will have an impact on existing administration proposals/strategy

Amends para. 83 of Schedule B1 to the Insolvency Act 1986

Liquidators and trustees in bankruptcy will not need the court's sanction to exercise certain powers S120 and S121 Includes the power to pay classes of creditors in full, compromise claims and bring legal proceedings for preferences/wrongful trading

Amends ss165, 167 and 314 of the Insolvency Act 1986 and related schedules

Challenge period for approval of an IVA S134 Any challenge must be brought within 28 days of the meeting called to consider the IVA proposal

Amends s262(3)(a) of the Insolvency Act 1986

Abolition of fast track IVAs S135 Procedure will no longer be available unless a debtor submitted a fast track IVA proposal and statement of affairs to the Official Receiver before 26 May

Omits s263A to s263G of the Insolvency Act 1986

Regular voluntary liquidation progress reports required S136 A progress report must be issued in a voluntary liquidation even if the liquidator changes within the first year

Amends ss92A, 104A and Schedule 10 to the Insolvency Act 1986

 Definition of shadow director set out for the purposes of the Insolvency Act 1986 and Company Directors Disqualification Act 1986 S90

No real change in substance

Amends s251 of the Insolvency Act 1986 and s22(5) of the Company Directors Disqualification Act 1986

Uncertain: Enabling provision effective 26 May but subject to further regulation
Application of general duties of directors to shadow directors where and to the extent that they are capable of so applying
S89
Further regulation expected

Amends s170(5) of the Companies Act 2006

Creditors of individuals and corporates will not need to submit a proof of debt to be paid out if their claim is "small"*
S131 and S132
What constitutes a small debt and further details will be set out in the Insolvency Rules [2015] (£1,000 limit mooted)

Amends the enabling provision in Schedules 8 and 9 to the Insolvency Act 1986

Certain large and listed corporates to publicise payment practices and policies
S3
Further Companies Act regulation will be required

Regulation of sales to connected parties in administration
S129
Allows the introduction of new regulations to deal with sales in administration to connected persons, which are concluded without the prior consent of the creditors

Will only be used if the industry does not comply with the findings of the Graham report and the imminent new SIP 16

October 2015
Reduction of time it takes to strike off and dissolve a company from the public register
S103
Reduction for voluntary strike-off, from 3-4 months to approximately 2 months; and for compulsory strike-off, from 5-6 months to around 3.5 months

Amends Part 31 of the Companies Act 2006

Ban on corporate directorships
S87
The Government may by regulation make exceptions to this

Under s156C there is a transition period of one year. Any remaining corporate directors will automatically cease to be directors unless they fall within an exception. The Government has been consulting on what form the exceptions should take. The latest proposal is to allow corporate directors provided all the directors of the corporate director are natural persons and their details are available in a public searchable register

2016
Companies will be required to keep a public "PSC register"
Jan 2016: Companies will be required to keep a register of people with significant control
April 2016**: Information must be filed at Companies House (N.B. no requirement to do so before this date)
April 2016**: Annual return replaced by "confirmation statement"
S81 and S82 and Schedule 3



S92
UK-incorporated companies (other than publicly traded companies with disclosure obligations) will have to keep a register of PSCs and file information about them at Companies House. They are broadly individuals who, directly or indirectly, hold over 25 per cent of the shares or voting rights in a company, can appoint or remove a majority of the directors or who can otherwise exercise significant influence or control over a company

Amends the Companies Act 2006

BIS Guidance to be published in October 2015

Instead of filing an annual return, companies will have to check and confirm that they have delivered, or are delivering with their confirmation statement, the information they were required to deliver to Companies House during the preceding 12 months. Private companies will (probably from April 2016) be able to opt out of keeping all or any of their registers of members, directors, directors' residential addresses, secretaries and PSCs. Instead, companies will have to ensure that equivalent information is available at Companies House, where it will be on the public register and available for inspection

Inserts a new Part 24 into the Companies Act 2006 in place of existing Part 24

Provisions with no implementation date published
Physical creditors meetings no longer default option***
S122
Abolishes creditors' and contributories' meetings as the default means of decision-making in insolvency procedures. Meetings to only be called if a prescribed proportion of creditors (or contributories) demand it

Will only apply where an officeholder is actually seeking a decision. Not to meetings required by the Insolvency Act 1986 itself. The Secretary of State may, by regulations, abolish other forms of meeting in due course. As drafted, the abolition will apply, in principle, to the approval of administrators' proposals

Inserts new s246ZE and s379ZA into the Insolvency Act 1986

New deemed consent procedure***



S122


An officeholder will circulate details of his proposed decision, which is deemed consented to by the creditors or contributories if a certain proportion of them do not object

See also the Insolvency Rules [2015]. Minimum number of consents may be changed by regulation

Inserts new s,246ZF and s379ZB into the Insolvency Act 1986

Supervisor may be first trustee in bankruptcy
S133
The Official Receiver will automatically become the trustee in bankruptcy on the making of a bankruptcy order unless the court orders it can be the supervisor of a preceding IVA

Creates a new 291A
Getting rid of certain notices***
S125
Creditors (of both individuals and corporates) will be able to opt out of certain notices issued by insolvency officeholders

Inserts new s379C and s383A into the Insolvency Act 1986

The draft Insolvency Rules [2015] go into more detail

Wrongful/fraudulent trading: Extension to administration***
S117
Administrators will have the power to issue proceedings for wrongful or fraudulent trading

Inserts new s246ZA, s246ZB and s246ZC into the Insolvency Act 1986

Allowing corporate insolvency officeholders to assign personal actions for benefit of estate***
S118
Liquidators and administrators will be able to assign their right to a claim for wrongful trading, fraudulent trading, preferences or transactions at undervalue

Inserts new s246ZD into the Insolvency Act 1986
Confirmation that floating chargeholder does not get the benefit of any officeholder action or assignment***
S119

The proceeds from any preference, transaction at an undervalue, wrongful or fraudulent trading claim (or assignment) brought by an administrator or liquidator will not form part of the assets available to meet the claims of the holders of any floating charge security (unless displaced by CVA or Companies Act 2006 reconstruction)

Inserts new s176ZB into the Insolvency Act 1986
Changes to directors' disqualification regime***
Part 9

New grounds for bringing disqualification proceedings against directors who have been convicted of offences overseas in connection with the promotion, formation or management of a company overseas, or who are not directors but who exert requisite influence over a director

Revised list of matters for court to take into account when considering whether a person is unfit to be a director of a company

Secretary of State will be able to apply for a compensation order against a disqualified director where the misconduct has caused identifiable loss to creditors 

Extension of the period in which the Secretary of State may apply for a disqualification order against a director of an insolvent company from two to three years

A liquidator, administrative receiver or administrator will have to submit a report on the conduct of a director in all cases and even if the relevant officeholder does not consider the director unfit to hold office

Amends the Company Directors Disqualification Act 1986

Changes to insolvency practitioner regulatory regime SS138 to 146 Secretary of State given the power to change the regulatory framework. New series of objectives for regulatory bodies, and powers to direct bodies to act in accordance with steps suggested by the Secretary of State

Secretary of State will be able to increase the number of recognised professional bodies to regulate insolvency practitioners or introduce a single regulator for the profession, if he thinks fit in due course

Inserts new s391B, s391C, s391D and s391E into the Insolvency Act 1986

* Amendments which are unlikely to be dealt with further until the Insolvency Rules [2015] which are anticipated to be passed in April 2016

** Proposed date according to the BIS provisional timetable issued in January 2015

*** Further regulation on the Act is not required; wording will come into force and the corresponding Insolvency Rules amended. Draft legislation bringing these provisions into force may be issued as early as October 2015 and Rules will be dealt with by/alongside the modernised Insolvency Rules [2015] (anticipated April 2016)

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.

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