The Small Business, Enterprise and Employment Act 2015

The Small Business, Enterprise and Employment Act 2015 (“the Act”) received Royal Assent on 26 March 2015. The aim of the Act is to enhance the transparency of UK companies. The Act introduces new filing requirements for companies, and will impact upon most businesses of all sizes.

The Act covers a broad range of topics and amends existing sections of the Companies Act 2006 (“CA 2006”) and inserts new sections into it. The Act is coming into force in stages, with some key provisions having been given effect from October 2015, and others due to come into force over the coming months.

October 2015

From 1 October 2015, the Secretary of State can apply to the court for the disqualification of a director on the grounds that they have been convicted of certain offences overseas. The Act also expands the factors which a court must take into account when deciding whether to disqualify a director. The time period for applying to the court for disqualification of a director has been extended from two years to three years.

On 10 October 2015 provisions relating to the suppression of directors’ date of births, changes to the appointment of directors and secretaries, and the company strike off procedure all came into force.

Prior to the Act, details of a director to be shown on the public register included the director’s full date of birth. Now, although the full date of birth of the director is to be supplied when appointing a new director, only the month and the year of birth will appear on the public register. If a director’s date of birth was supplied prior to 10 October 2015, then the full date of birth will continue to show on the public register. If a private company chooses to keep a register of directors only at Companies House, and does not maintain its own register, then the information shown at Companies House will include the full date of birth. If, therefore, companies wish to supress date of birth information, they should maintain their own register of directors, as well as the public register.

Changes to the appointment of directors means that directors no longer “consent to act”, but rather the company confirms that the director has consented to act as a director. Companies House will notify the new director of the appointment and their duties as a director. The new director can apply to Companies House for the removal of their appointment on the grounds that they did not consent to the appointment. Companies are advised to obtain written consent from a new director which the company should retain for the purposes of proving that the director did consent to the appointment.

The company strike off procedure should be accelerated as a result of the Act. Previously, under the CA 2006 the Registrar of Companies could strike off a company if it appeared that it was no longer carrying on business. This took between 5-6 months, but should now take 3-4 months. Similarly, in relation to a voluntary strike off of a company, the time period has been reduced from 3-4 months to 2-3 months.

December 2015

In December 2015, provisions in relation to disputes relating to a company’s registered office came into force. From December 2015 the CA 2006 is amended so that the Secretary of State can make regulations giving power to the Registrar of Companies to change a registered office address if the Registrar is not satisfied that a company is authorised to use the proposed address. Companies should ensure that their registered office is correct, and that they are authorised to use that address, and should be aware that they can now take steps against other companies using their registered office without authorisation.

April 2016

From 6 April 2016 most companies (and limited liability partnerships) will have to start maintaining a register of people with significant control (“PSC register”), although the obligation to file this information at Companies House will not come into effect until  30 June 2016. The PSC Register will need to include details of individuals with significant control over the company who are “registrable”, along with the details of any relevant registrable legal entities.

An individual or relevant legal entity is non-registrable if they do not hold any interest in the company save for them holding significant influence or control over other legal entities which are registrable persons.

The PSC register must be available for inspection at the company’s registered office, however, from June 2016 private companies can choose to only maintain their PSC register on the public register at Companies House if they wish.

A person with significant control (“PSC”) over a company is a person who falls into one or more of the following categories:

• The individual holds, directly or indirectly, more than 25% of the shares in the company;
• 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 over the company. The exact meaning of “significant influence or control” is yet to be given, but guidance as to its interpretation is expected in due course;
• The individual has the right to exercise or actually exercises, significant influence or control over any trust or firm (which is not a legal entity) which has significant control (under one of the four categories above) over the company.

The required details of a registrable person will be the individual’s:

• name;
• address for service;
• nationality;
• date of birth;
• usual residential address;
• date on which they became a registrable person as regards the company in question; and
• the nature of their control over the company.

This information will be publicly accessible at Companies House, however, as is the case with director’s information, the PSC’s residential address and the day of their date of birth will be kept private.

The PSC register must be maintained and the information on it must be confirmed to Companies House at least every 12 months by way of the Annual Confirmation Statement which will replace the current Annual Return Statement from June 2016. Every company is under an obligation to carry out reasonable enquiries to find out if anyone is a registrable person or registrable legal entity, and if they are, to ensure they are identified on the PSC. Where a person is held to be a PSC, and they are also a registered director of the company, they will still need to be identified on the PSC register, even though they will be shown as a director on the public Register of Directors.  Failure to investigate the registrable persons and registrable relevant legal entities of a company is an offence punishable by a fine or imprisonment. Companies should start thinking about whether they have individuals or relevant legal entities with significant influence or control, and should start developing internal procedures for identifying such person. Companies House has not, however, yet provided the necessary forms to be used to file the PSC register.

From June 2016 private companies will have the option of keeping this information on the public register at Companies House, rather than having a separately maintained the PSC register. A company can elect to keep the information on the public register at any time after June, and there is a specific procedure that should be followed, which includes notifying all registrable persons and registrable legal entities at least 14 days prior to the election that the company is electing to keep the PSC register at Companies House.

These provisions of the Act will impact upon most businesses, and companies should ensure that their company secretary or whoever else deals with such matters is aware of these changes and ready to comply with the provisions as and when they come into force. There are further sections of the Act due to come into force later this year. These primarily relate to changes to filing requirements which are minor changes and should not have a significant impact on companies. Companies should, however, ensure that they are prepared for them, and we would advise companies to seek the assistance of their solicitor or accountant in this regard if necessary.

ENDS

This is for information purposes only and is no substitute for, and should not be interpreted as, legal advice.  All content was correct at the time of publishing and we cannot be held responsible for any changes that may invalidate this article.