Small Business and Enterprise Act - How will the new changes affect your business?

On the 26th March 2015 Royal Accent was given to the Small Business, Enterprise and Employment Act (“The Act”). Over a third of this Act contains changes to Company Law and the way limited companies should be administered with the main purpose of the Act being a way to reduce red tape and to increase transparency and trust in UK companies.

Detailed below are some of the main changes and the likely dates of implementation.

MAY 2015

Bearer Shares

Companies will no longer be able to issue Bearer Shares and those companies that do have Bearer Shares will have 9 months to convert these into Share Capital.

OCTOBER 2015

Corporate Directors

No corporate body may be appointed as a Director of a UK company. This means that any UK company which has a corporate director must resign the position within a given timescale. The only exceptions would be Group structures with large listed companies or large private companies and charities.

Registered Offices

The Registrar of Companies will have the authority to change the registered office address of a company if a complaint is made that the company is using an address it is not authorised to use. The company will be contacted to provide evidence of the use of address and if no evidence is forthcoming the address may be changed to a director’s home address or an address that the Registrar decides. This will obviously be difficult where the director lives outside the UK.

Appointment of Director Procedure

The existing arrangements for appointing a Director online either on an existing company or on formation of a new company will change.

The three from seven personal information data will be replaced by a Statement of Truth to confirm that the Director or Secretary has consented to their appointment. On receipt of the appointment Companies House will write to the individual Directors notifying them of their appointment as a Director and their legal duties. If the newly appointed Director does not wish to be appointed they may be able to contact Companies House to request removal of their appointment.

The Company may also be requested to show evidence of the consent to act by that individual. We would suggest that every appointment be approved in a meeting where the minutes should contain a “consent to act” clause which would require signature by the appointee. The 3 out of 7 personal criteria will still apply for shareholders on formation.

Accelerated Strike off

The timescale on companies being struck off by Companies House will decrease. Voluntary strike off will be reduced from 3-4 month to 2 months and compulsory strike off through late filing and inactivity will be reduced from 5-6 month to 3 ½ months.

Directors Date of Birth

The day of birth will not be shown on the Companies House public register so whilst you must still give the full date of birth ie 11.06.1958 only 06.58 will be shown.

JANUARY 2016

New Company Register - Register of People with Significant Control

In January it will be necessary to hold a new Company Register. This Register will be open to inspection by the public and will contain information on any person who has a 25% or more interest in a UK company or who has control, directly or indirectly, to exercise over 25% of the votes. This is regardless of whether the company shareholding is held by a nominee shareholder and in these cases it is the beneficial owner’s name that has to be disclosed in the register.

Please Note:- we are unsure if this register has to be disclosed at Companies House, we do know that all nominee arrangements will be open to anyone who physically wants to inspect the Register at the address where the Register is held. The Register will be similar to the register of Directors and will contain the name, date of birth, service address and the date on which the beneficial interest was acquired and how it is held.

We would assume therefore that a separate private register of Residential addresses of Persons with significant control may also be required. It is the Company and its officer’s task to show reasonable efforts to find out the information on beneficial owners and a legal obligation of the beneficial owners to disclose such information.

Penalties for non-disclosure could involve hefty fines and imprisonment. A subsidiary may only disclose its holding company, but the holding company must disclose all shareholders with significant control.

APRIL 2016

Statement of Capital

The requirement for a Statement of Capital on formation and on any changes to a company such as allotment and sub-division will remain, however, instead of the requirement to detail paid up capital it will be necessary to detail the aggregate amount of capital unpaid on each share only.

Annual Return

The annual return will be abolished. In its place will be a confirmation to Companies House at least once a year or when making a change of officers or share capital that the data filed at Companies House is up to date. Provided that there have been no changes, shareholder information may not be required to be submitted. There will still be an annual fee but it has not been decided how this fee will be paid, it may even change to an accounts filing fee.

Company Registers

Private Companies will have an option of keeping Company Registers at Companies House. This is completely optional and the registers to be kept would be the Register of Directors’, Register of Directors’ Residential addresses (this one is not available to the public), Register of Secretaries. The Register of Members and the new Register of People with Significant Control may also be kept upon the approval of ALL Members. Companies may opt to file other information on the public register such as website addresses and general information but this has not been fully formalised.

Other small changes may include the following:-

It will be optional for email addresses to be used by Companies House for routine correspondence and statutory notices. With their existing spam issues we are not sure this would be a good idea, however, it would not be compulsory

Subsidiary Companies should be listed in one place and it is believed that the best place would be in the Accounts of the company

Private companies will be able to file accounts simultaneously with Companies House and HMRC.

Article provided by FIRST CORPORATE LAW SERVICES LTD - WWW.FCLS.CO.UK