Small Business, Enterprise and Employment Act 2015 – Are you Ready for the latest Changes?
The Small Business Enterprise and Employment Bill was announced during the Queen’s Speech on 4 June 2014 and gained Royal Assent on 26 March 2015
The Act covers a wide range of matters, but of interest to all companies will be the corporate aspects with key company law changes, such as those designed to enhance the trust and transparency of UK businesses and changes to the filing regime.
The Act is being implemented in phases starting from May 2015 to the end of this year. However, there are a number of issues businesses should consider now to prepare themselves for the changes ahead. The key implications for business are summarised below, generally following the order of their implementation.
Further Key Changes and Implementation Timetable
1. April 2016
There is to be a new simplified process by which the Registrar can rectify the register if the person concerned objects to their appointment. Unless a company can provide evidence that the 'consent to act' was given, the presumption is that consent was not given and the register must be amended to remove the appointment. Therefore, it will become easier to have falsely or incorrectly appointed directors’ details removed from the register.
Registered office disputes
A new process will be introduced to provide a remedy where a company is using an address for its registered office but is not authorised to do so. Where a complaint is received that a company or a limited liability partnership (LLP) is wrongly using a registered office address, Companies House will investigate. If the registrar is satisfied that a company or LLP is not entitled to use an address, they will have the power to change the address of that company or LLP to the ‘default’ address.
Acceptable evidence that a company has the right to use a registered office address may be a document which shows the address is a building the company owns, one they rent, or the company has an agreement from the owner that they are allowed to use the address as a registered office address.
Persons with significant control (PSC) - maintenance of register
Royds reported in detail on this new requirement in a separate blog article. Please refer to the link below for more information.
2. June 2016
Check and confirm
The requirement to file an annual return with full company details will be abolished. It will be replaced with a 'check and confirm' process. From June 2016 onwards, companies will file, at least once every 12 months, a confirmation statement detailing only any changes that have occurred since the last confirmation statement.
For new companies, the first statement should be provided 12 months from the date of incorporation of the company.
Persons with significant control (PSC) - publication on central register
A company's PSC register must be made publically available from 30 June 2016. For new companies, this will need to be filed at Companies House on incorporation.
Any updates to PSC registers will need to be made via the new ‘check and confirm’ process.
Private company registers may be kept at Companies House
Private companies will (with shareholder approval) be able to opt to keep certain information on the central public register at Companies House, instead of being required to maintain their own separate statutory registers (such as registers of members, directors, secretaries, directors’ residential addresses and the new PSC register). This is voluntary, and a company can continue to hold its own registers if it so wishes.
It should be noted that if a company elects to hold registers information at Companies House, this will become part of the public record. For example, information such as shareholders’ addresses would be protected when registers are held by the company. This information becomes part of the public record when the information is kept at Companies House.
The regime relating to the disqualification of directors will be updated and strengthened.
A new approach for liquidators, administrators and administrative receivers will be introduced in relation to reporting misconduct by directors. There will be two new grounds for disqualifying a director in the UK:
- Where they have been convicted of a company-related offence overseas; and
- Where they have instructed a disqualified director.
The range of matters a court must consider when disqualifying a director will be expanded to include:
- The nature and extent of harm the misconduct has had; and
- The director’s track record in running failed companies.
The Secretary of State will be able to seek compensation from a disqualified director where misconduct resulting in their disqualification has caused identifiable loss to creditors.
The time limit to apply to court for disqualification of an unfit director of an insolvent company will be increased to 3 years from the day the company becomes insolvent (previously 2 years).
Statements of capital
Statements of capital will be simplified and made consistent throughout the Companies Act 2006. The changes will remove the requirement to show the amount paid up and unpaid on each share. Instead, companies will need to show the aggregate amount unpaid on the total number of shares.
Companies will only need to provide a full statement of capital where changes have been made during the year.
3. October 2016
Whilst at present a UK company is required to have at least one natural person as a director, it can also appoint corporate bodies as directors. From October 2016, there will be a prohibition on appointing corporate directors. There will be some limited exceptions and these are currently the subject of a public consultation by BIS.
The implication for any company with an existing corporate director is that it will need to take action, either explaining how it meets the conditions for an exception or give notice to the registrar that the person has ceased to be a director. Companies with any existing corporate directors in the group should start considering the action they will take when this provision comes into force.
If you have any questions or need any assistance regarding the key changes above please do not hesitate to contact John North ([email protected]), Claus Andersen ([email protected]) or Tony Roberts ([email protected]) from our Corporate and Commercial Department either by email or on 0207 583 2222.
Please note that this document is for general information only and should not be treated as legal advice or as a substitute for reviewing, in detail, the relevant provisions of the Act and the Companies Act 2006 as amended. We do not accept liability to anyone who does rely on its content.