25 January 2016

Small Business, Enterprise & Employment Act 2015 - Advice Note

This year marks the implementation of some of the key provisions of the Small Business, Enterprise and Employment Act 2015 which passed last year. The Act introduces a number of measures aimed at reducing red tape and improving transparency in the ownership of UK companies. Some of the key corporate changes are as follows:

  1. From April 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 June 2016, information on PSC’s will have to be submitted to Companies House as part of the annual confirmation statement (see below). 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. Companies are 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. 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. Companies 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).

Whilst the new measures would seem to assist in increasing transparency they will no doubt, in the short term, place some additional burdens on companies. It is worth noting that the sanctions for failing to comply with the new rules can have serious consequences, particularly in the case of a failure to maintain a PSC register, for which there can be criminal liability on the part of the Company, its directors or its shareholders.

If you would like to discuss the Small Business, Enterprise and Employment Act 2015, or if you require our input in ensuring that you are compliant with the new provisions, please do not hesitate to contact us.

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