Small Business, Enterprise and Employment Act 2015

05 November 2015

L_crumley

The Small Business, Enterprise and Employment Act 2015 (the “Act”) received Royal Assent on 26th March 2015. The changes will have an impact on what information a company must provide, how this is recorded and made available to the public.

The Act forms part of the government’s directive to improve transparency in the ownership of UK companies, streamlining company filing requirements and improving the quality of information available on the public register.

Another key staging date was reached in October. To recap, the key dates for implementation of the Act are as follows:

26th May 2015:

Shadow directors

The Companies Act 2006 (“CA 2006”) defined a shadow director as an individual “in accordance with whose directions or instructions the directors of the company are accustomed to act” (section 251 CA 2006). Section 80 of the Act now makes shadow directors subject to the same statutory duties and responsibilities of directors as stated in Section 170-177 of the CA 2006, where applicable. Section 90 of the Act notes that a person is not deemed to be a shadow director simply by reason only that the directors act upon their advice in a professional capacity.

10th October 2015

New appointment of director form

The full date of birth details will be required for filing purposes when recording the appointment of directors and people with significant control (PSC), however only the month and year of birth will be available on the public register (which may only be accessed by certain agencies such as credit reference agencies or specified public authorities).

Accelerated strike off

The time it takes for voluntary strike off will be reduced from approximately 3 months from publication of a strike off notice in the Gazette to 2 months, provided no objection has been made.

Consent to act as a director or secretary/statement of truth

Notification of the appointment of a new director or company secretary formerly required the appointee to give their consent to act on the Companies House form.

This has been replaced by a statement of truth from the company, which is signed by the appointee, confirming their consent to act as a director or company secretary. The statement of truth is not filed at Companies House, but it should be kept on file (preferably with the company books).

The new hard copy or electronic filing of Form AP01 (appointment of individual director), Form AP02 (appointment of corporate director), Form AP03 (appointment of individual secretary) and Form AP04 (appointment of corporate secretary) will not require signature or personal authentication; there will only be an option to tick a box on the form to confirm that the Company holds a statement of truth signed by the appointee.

December 2015

Director disputes

Where a person has received notification from Companies House of their appointment as a director, but had not given their consent to act, it will be possible for them to have their name removed from the register.

5th April 2016

People with significant control (PSC)

Section 81 and Schedule 3 of the Act inserts a new Part 21A in CA 2006 in which Companies will be required to keep and maintain a register of people with “significant control” over the company. This will be publically available at the registered office address and it is hoped will improve transparency in ownership of companies. It will be possible for private companies to hold their PSC register on the public register at Companies House.

PSC are individuals or legal entities are defined as those who meet the following conditions:

  • The individual holds, directly or indirectly, more than 25% of the shares in the company; if the company does not have a share capital, an individual holding a right to share in more than 25% of the entity’s capital or profits;
  • The individual holds, directly or indirectly, more than 25% of the voting rights in the company;
  • The individual holds the right, directly or indirectly, to appoint or remove a majority of  the board of directors of the company;
  • The individual has the right to exercise or actually exercises, significant influence or control of over the company (guidance on the meaning of “significant influence of control” is being drafted by an expert working panel on behalf of the Secretary of State and is due to be published in October 2015);
  • The trustees of a trust or the members of a firm (as defined in Section 1173 (1) of CA 2006) that is not a legal person and in turn meets one or more of the other conditions specified above, has the right to exercise, or actually exercises significant influence or control over the activities of that trust or firm.

Part 3 of a new Schedule 1A in the Act expands on the definitions of PSC, noting if two or more persons each hold a share or right jointly, each of them will be treated for the purposes of this Schedule as holding that share or right.

The PSC register must be kept from 5th April 2016 in preparation for the need to file this information at Companies House from June 2016.

June 2016

Annual Return and filing requirements – “Check and Confirm”

The requirement for a company to file an Annual Return will be replaced by a confirmation statement stating that the information recorded on the register is correct at least once a year (“check and confirm”). There will be a fee to file this form (it is intended this will be an electronic form, however a paper form will be available on request).

Companies House intend to reduce the 28 day grace period currently granted to companies which have not filed their Annual Return before the filing deadline to 14 days. After this time, failure to file the check and confirm statement will be regarded as an offence, and Companies House may begin the strike off process. 

A company may choose to file the check and confirm statement as many times as they wish over the course of a year.

Requirement to keep and maintain PSC register

From this point, the PSC register must be filed upon incorporation and updated when the company delivers a confirmation statement (which shall replace the Annual Return) to Companies House. Guidance on this matter is currently being drafted.

Company registers

It will be possible for private companies to keep the information required for some of their statutory registers to be held and maintained only on the public register by Companies House.

October 2016

Corporate Directors

Section 87 of the Act proposes to insert new sections 156A, 156B and 156C in the CA 2006 requiring all directors to be natural persons and prohibiting companies to have a corporate director. Any such appointments made will be void and deemed to be an offence.

Section 156B of the CA 2006 gives the Secretary of State the power to make regulations specifying the circumstances and conditions in which there may be exceptions to the appointment of corporate directors.

Should you require any further information about any of these changes, please contact your usual Carson McDowell contact.

Back