Who Needs Law update: Small Business, Enterprise and Employment Act 2015. Who Needs Law is a boutique legal service provider for start ups. We offer low cost solutions for corporate funding rounds, commercial contracts, share option schemes, EMI, financial services. Save more with Who Needs Law.
Purpose of the Act
- To reduce the red tape for small companies.
- To make the UK a trusted and more fair place to do business by increasing transparency.
- Improving the quality of information available through public registers.
- Who does it affect?
All companies will be affected to some extent by the Act. Most companies will see their Companies House filing requirements change. The changes are to be rolled out in stages over the next 10 months culminating in June 2016.
26 May 2015
Bearer shares: Bearer shares have been abolished. Companies with existing bearer shares have a transitional period of 9 months to either: surrender, cancel or convert them into registered shares. Shadow directors: The existing duties of directors under the Companies Act 2006 have been extended to shadow directors.
Date of Birth: A director’s day of birth will be suppressed from the public register. Accelerated strike off: the Registrar will be able to strike off a company from the register in 4 months instead of 6. Consent to act as director or secretary: Companies need to authorise Companies House to add a statement to the AP01/ AP03 filings when appointing a new director or secretary. This replaces the ‘consent to act’ requiring a signature or web authentication from the new director/secretary. Companies House will make an entry on the public register, write to the new director/secretary confirming the appointment and explain their statutory duties.
Director disputes: Implementation of a simplified process to remove falsely appointed directors from the register. Resisted office disputes: Offers a remedy for premises being used as a registered office without authorisation.
People with significant control (PSC): Companies will be required to maintain a register for people with significant control on a PSC register. Information to be provided includes: name, service address and date of birth. A person with significant control is an individual who either:
- Holds 25% or more company shares or voting rights
- Control rights to appoint or remove a majority of the board
- Have the exercisable right or ability to exert ‘significant influence or control’ over the company.
Further guidance will be provided by the government in due course on the meaning of ‘significant influence or control’. The data provided to Companies House will be publicly available except the directors’ day of birth.
Check and confirm: The annual return will be abolished and replaced with a confirmation statement outlining any changes to the company. The confirmation statement is due annually.
People with significant control: The companies’ PSC register must be provided to Companies House as part of the check and confirm process.
Company registers: Private companies can opt to maintain certain information on the Companies House public register only. This eliminates the need for statutory registers including the registers of members, directors, secretaries, directors’ residential addresses and the PSC register.
Directors’ misconduct: The disqualification of directors regime will be strengthened- see boxed text below.
Statement of capital: The statement of capital will be simplified.
Corporate directors: Appointing new corporate directors will be prohibited from this date and existing corporate directors will cease to to be directors after 12 months. Exceptions are available in limited circumstances.
Changes to the Company Directors Disqualification Act 1986 The Small Business, Enterprise and Employment Act 2015 will implement the following changes to the Company Directors Disqualification Act 1986.
- Instructions or directions given to a director which results in conduct leading to disqualification of the director allows the court to also impose a disqualification order on the instructing person.
- The factors for an unfit director have been expanded. The court must consider if the directors’ behaviour, when determining if the director is unfit, warrants disqualification and the duration of disqualification using the new guidelines.
- The Secretary of State can bring proceedings against a person convicted abroad of specified offences.
- Compensation orders can be sought against disqualified directors by creditors of an insolvent company who have suffered identifiable loss as a result of the directors’ misconduct.
For further information on how the Small Business, Enterprise and Employment Act 2015 may affect your business please contact Michael Wharton.