The Small Business, Enterprise & Employment Act 2015
Significant changes to UK company law – the Small Business Enterprise and Employment Act 2015 (“SBEE”)
The SBEE received Royal assent on 25th March 2015 and has been implemented in phases from May 2015 to October 2016. The measures that affect companies largely aim to reduce red tape whilst increasing the quality of information on the public register as well as improving corporate transparency.
All private companies have been affected by at least some of the changes. Companies and their directors and administrators therefore need to become familiar with the key company provisions in order to start to put processes and procedures in place to deal with the changes being brought about by the SBEE. More information is available on Companies House website. Companies should also consider seeking independent legal advice on the SBEE.
The key headline points which SME businesses need to be aware of are:
1. Abolition of bearer shares:
Bearer shares have been abolished.
2. PSC Register:
There is a register of people with significant control (PSCs) of a company. Companies are required to identify individuals and legal entities who have ultimate ownership of more than 25% of their shares or voting rights, or the right to appoint or remove a majority of the board, or who exercise significant influence or control over the company. This is considered to be one of the most significant changes that the SBEE has brought in.
3. Abolition of annual returns – replacement with confirmation statement:
Companies no longer need to submit an annual return. Instead companies are required to confirm (or update) similar information at any time during a 12 month period. This is known as a “confirmation statement”.
4. Option to keep company registers at the central registry:
Companies have the option to keep their registers at Companies House. With shareholder approval, registers of PSCs, members, directors and secretaries can all be kept at Companies House. The obligation to maintain and update the information remains but companies can opt to no longer physically hold the records, which will instead be kept by Companies House.
5. Shadow directors bound by same duties as appointed directors:
Shadow directors are now under the same legal duties as individual formally appointed directors (as set out in the Companies Act 2006), “… where and to the extent they are capable of applying.” Further, the definition of a shadow director has been amended so that a person will not be a shadow director if the board acts in accordance with instructions or directions given by that person in the exercise of a function conferred by or under legislation.
6. Accelerated company strike off procedure:
The SBEE enables a company to be struck off the register slightly faster, in most cases in two rather than three months.
7. Director and secretary consent to act changes:
The consent to act procedure for directors and secretaries has changed. More information can be found here .
8. Director & Registered Office disputes:
The processes for removing a falsely appointed director’s details from the register and for removing the address of an unauthorized registered office are being simplified.
9. Date of birth:
The day element of the date of birth of all company directors is omitted from the information on the register available for public inspection. This does not apply retrospectively.
10. Statement of Capital:
The SBEE alters the contents of the statement of capital. It is simplified and companies are no longer required to include the amount paid up and unpaid on each share. Instead the aggregate amount unpaid on the total number of shares must be specified.
11. Abolition of corporate directors:
Corporate directors (with only limited exceptions) are expected to be prohibited. Existing directors who are not natural persons will automatically cease to be directors following a one year transition period. This has yet to come into force.