Small Business, Enterprise and Employment Act 2015 – Have you made preparations?
New register of ‘persons with significant control’ (‘the PSC register’)
One of the most significant features of the SBEE is the need for companies to create a new PSC register. The SBEE requires data about individuals (PSCs) who own or control more than 25% of a UK company’s voting rights or shares (or meet certain less common criteria) to be disclosed on a public and private register.
Companies of all sizes will be required to comply with the provisions; any breach will be a criminal offence. Companies need to take steps to ensure that all PSCs are identified and that the reporting obligations are strictly observed. Information about PSCs will be publicly available from the records maintained by Companies House from April 2016 and the data will need to be periodically updated.
Reporting of company payment practices and policies
From April 2016, large companies will be required to publish information about their business-to-business payment practices. As confirmed by the Department for Business, Innovation and Skills, companies will need to report biannually and publish a report on the company’s website. The report should include:
1. payment terms;
2. average time taken to pay;
3. the proportion of invoices paid late;
4. the proportion of invoices paid in 30 days or less, between 31 to 60 days and beyond 60 days; and
5. any late payment interest owed and paid.
These major reporting changes could lead to reputational difficulties for companies with poor payment histories and companies will need to put in place suitable provisions to ensure that they properly capture the necessary data.
Gender pay gaps
By 25 March 2016 the SBEE requires the implementation of regulations which will force businesses to publish data showing if there is a difference between the pay of female and male employees. This will apply to companies which have more than 250 employees.
Disqualification of directors
The SBEE will amend the Company Director Disqualification Act 1986 by widening the grounds to make disqualification orders and looking more broadly at the nature and extent of any loss or harm which could have been caused by the person’s conduct in relation to a company. The period of time to apply for disqualification of a director of an insolvent company will be increased from 2 years to 3 years.
Accelerated strike off procedure
The SBEE will allow a company to be struck off the register faster than before. From October 2015 it is expected that the timeframe to strike off a company will reduce from 5 – 6 months to 3 – 4 months if the Registrar of Companies instigates the process and will reduce from 3 to 2 months if the company undergoes voluntary striking off.
The more flexible regime should incentivise groups of companies to strike off dormant subsidiaries and thus reduce the ongoing administrative burden.
The SBEE introduces various changes to filing obligations. The most significant of which are mentioned below.
A. Since October 2015 a company has been required to make a statement that a proposed director has consented to act, as opposed to the previous practice whereby a proposed director provided signed consent to becoming a director.
B. The registrar will send to an appointed director a notice disclosing his or her appointment and information regarding the office and duties of a director. A person whose name is disclosed on the register as a director will be able to apply to have it removed if it was inserted without consent.
C. From April 2016 companies will not be required to include the amount paid up and unpaid on each share on a statement of capital. Companies will instead be required to specify the aggregate amount unpaid on the total number of shares.
D. From April 2016 companies will not need to submit annual returns but they will need to deliver a confirmation statement at least annually stating that the company has disclosed all required information in the last 12 months. A new review period of 12 months will be set with effect from the date of the confirmation.
E. From April 2016 companies will be able to elect to keep certain information on the public register at Companies House instead of in separate private company registers, although private companies may prefer to maintain their own registers as they will be able to make changes more quickly and also certain details which would not otherwise be published (such as shareholders’ addresses and directors’ full dates of birth) would need to be made public if the company were to elect to have its registers maintained at Companies House.
F. Since October 2015 the SBEE requires directors to be natural persons (as opposed to corporate directors), subject to certain exceptions. Directors who are not natural persons will cease to be directors in October 2015, unless an exception applies.
Companies are reminded that the concept of bearer shares was abolished under provisions introduced in May 2015. Companies with bearer shares are required to cancel them or convert them into non-bearer shares. If a company still has bearer shares in issue by 26 February 2016 it will be required to apply to court to cancel them. If the company does not deal with the bearer shares pursuant to the prescribed procedure then the company will be committing an offence.
These significant changes increase the burden on those running companies and failure to comply can give rise to serious consequences.
Your Royds team can assist you in ensuring that your company puts in place suitable systems to ensure compliance with the forthcoming developments.