Can legislative changes really reduce red-tape for small business?
Richard Frogson, partner and specialist in corporate law, takes a look at what the changes to the Small Business, Enterprise and Employment Act 2015 mean for small businesses.
The Small Business, Enterprise and Employment Act 2015 received Royal Assent on 26 March 2015. The Act introduces a number of measures aimed at reducing red-tape and improving transparency in the ownership of UK companies.
The corporate provisions of the Act will be implemented in phases, the first provisions came into effect a few weeks ago. However, there are several more main corporate changes, which I've highlighted below.
From May 2015 companies will no longer be able to issue bearer shares (unregistered shares title to which passes by physical possession of a bearer warrant thereby making ownership of the shares difficult to ascertain). Companies that currently have bearer shares in issue have until 26 February 2016 to complete the surrender of them for registered shares.
In addition, the general duties of directors contained in the Companies Act 2006 will apply to shadow directors (a person in accordance with whose instructions the directors act) to the extent capable of applying.
From October 2015, subject to limited exceptions, a company will no longer be able to appoint corporate directors and companies with existing corporate directors will have until October 2016 to remove them. In addition, in relation to new director appointments, companies will be required to file statements confirming that the director has consented to act (replacing the old form signed by the new director).
From January 2016 companies (other than those whose shares are publically traded) will be required to keep a register of People with Significant Control over the company (PSC register). Whilst further guidance is awaited, a person will be deemed to have significant control where the individual (either alone or jointly):
holds more than 25% of the shares or voting rights in the company; or
has the ability to appoint or remove a majority of the board of directors; or
exercises, or has the ability to exercise, significant influence or control over the company, or a trust or firm that itself has significant control over the company.
Companies will have an obligation to investigate and update the PSC register and individuals will have an obligation to notify the company of any significant control.
From April 2016 companies will be required to file an annual confirmation statement (replacing the annual return) confirming that that they have made all necessary filings and updating their information. In addition, private companies will be able to elect to maintain their statutory registers on the public register at Companies House.
Whist the new measures would seem to help in increasing transparency they will no doubt, in the short term, place some additional burdens on companies. As always, if you have any questions about this legislation may affect your business please do get in contact with me or one of my colleagues, and we'll be delighted to help.
