Some Headlines for UK Companies from the Small Business, Enterprise and Employment Act 2015
As part of the UK Government's drive to encourage transparency and reduce company red tape, the staged implementation of The Small Business, Enterprise and Employment Act 2015 is now underway. This advisory gives a snapshot of some key changes which UK companies should be prepared for, and when they will take effect.
From October 2016, a UK company will no longer be able to appoint corporate directors and all its directors will be required to be natural persons. There will be a 12-month grace period for any existing corporate directors to be replaced with an individual, after which time any corporate directorships will automatically terminate. An appointment made in contravention of this prohibition will be of no effect and it will also be a criminal offence to make such an appointment.
The Government is currently considering exceptions to the general requirement that directors must be natural persons, but none have been published so far. The UK Government has indicated that a company may only be able to appoint a corporate director where all of that corporate director's own directors are natural persons and certain information about those persons is required to be publicly available (for example, under the law which the corporate director is governed by).
With effect from 10 October 2015, amendments to the Companies Act 2006 have reduced the time period that the Registrar of Companies must wait before removing a company from the Companies House register, otherwise known as 'strike off'. If a UK company appears to not be carrying on business, the time allowed for a response to the two consecutive warning notices sent by the Registrar to the company is reduced from one month to 14 days, and the time which must elapse from the date of the publication of the strike off notification in the Gazette until the strike off can occur is reduced from three months to two months. Overall, this should reduce the time period from six months to four months.
In addition, the voluntary strike off process which can be instigated by a company itself is reduced from three months to two months.
Consent to Act as a Director or Secretary
The existing 'consent to act' procedure for newly appointed directors and secretaries has been replaced from 10 October 2015. Companies can now file a statement in respect of new appointments, rather than the new appointee physically signing a paper form or personal authentication on electronic filings. Companies House will then write to all newly appointed directors and secretaries to make them aware of the appointment and explain their statutory duties.
Directors/PSC's Date of Birth
From 10 October 2015, with the aim of combating incidents of identity theft, the partial suppression of directors' and persons with significant control (PSCs') dates of birth on the public register came into effect. Directors and PSCs are still required to provide their full date of birth, however only the month and the year, not the day, will be available for inspection on the public register. The date of birth of a UK company director and of a PSC will remain available for inspection on the company's own register, and if the company has elected to hold its register on the central register, rather than keep its own, again the day element will not be omitted from public inspection.
There will be no benefit to existing directors, as information already on the public register is not required to be removed by Companies House.
See as to PSC Registers: Are You Ready With Your PSC Register?
To cut down on the administrative burden for a UK company, from April 2016 private UK companies can elect to keep certain information on the central public register at Companies House, rather than keep its own registers. The relevant registers are: the register of members; the register of directors; the register of residential addresses of directors; the register of secretaries, as well as the PSC register.
The shareholder(s) must unanimously approve an election to keep the register of members on the central register.
During the period an election is in force, a company is nevertheless required to continue to keep its own relevant register(s) that it held prior to the election, albeit that there is no requirement to update and reflect any changes in them.
In an effort to simplify continuing filing obligations for UK companies, from June 2016 the annual return will be replaced by a confirmation statement. The annual return is a company's annual summary of its capital and shares, together with the list of current directors, along with their names, address for service and business occupation, details of the company secretary and their names, and address for service and a current list of shareholders.
Instead, companies will be required to check and confirm that the company information previously delivered to Companies House was everything required in the period and to notify of any changes at least once every year. The information that must be confirmed is: the details of a change in registered office; information on a company's register of directors and secretaries and the PSC register. If the company has share capital, the company must also provide a statement of capital, unless there have been no changes since the last statement of capital was delivered to the Registrar. The confirmation statement must be submitted to Companies House at least once every 12 months.