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 is being 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 will be 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 – in force May 2015:
Bearer shares have been abolished. More information regarding bearer shares can be found here.
2. New PSC register – in force April 2016 (maintenance of register) & June 2016 (publication on central register):
There is to be a new register of people with significant control (PSCs) of a company. Companies will be 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 is bringing in.
3. Abolition of annual returns – in force June 2016:
Companies will no longer need to submit an annual return. Instead companies will be required to confirm (or update) similar information at any time during a 12 month period. This will be known as a “confirmation statement”.
4. Option to keep company registers at the central registry – in force June 2016:
Companies will 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 will remain 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 – in force May 2015:
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 – in force October 2015:
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 – in force October 2015:
The consent to act procedure for directors and secretaries has changed. More information can be found here.
8. Director & Registered Office disputes – in force December 2015:
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 – in force October 2015:
The day element of the date of birth of all company directors will be omitted from the information on the register available for public inspection. This will not apply retrospectively.
10. Statement of Capital - in force June 2016:
The SBEE will alter the contents of the statement of capital. It will be simplified and companies will no longer be 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 – in force October 2016:
Corporate directors (with only limited exceptions) will be prohibited. Existing directors who are not natural persons will automatically cease to be directors following a one year transition period, i.e. by October 2017.