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Co-Authors: Neil Pfister and Daneilla Magennis
The Small Business, Enterprise and Employment Act 2015 (the Act) gained Royal Assent on 26 March 2015 and brings significant changes to the Companies Act 2006 (CA 2006). Despite its misleading name, this reformatory piece of legislation contains provisions that apply to UK companies of all sizes. Its aim is to reduce red tape for businesses and promote transparency in relation to the control and ownership of UK companies. This summary note outlines the major changes to company legal requirements that have taken effect so far and then sets out the pipeline of changes yet to occur with their most recently-anticipated implementation dates.
CHANGES ALREADY IN FORCE
Abolition of Bearer Shares
Bearer Shares are shares that have been issued but not registered to a specific shareholder in the company’s share register. From 26 May 2015, the issue of such shares became prohibited. Any existing bearer shares are subject to a nine month surrender period in which they are to be converted to registered shares, or else cancelled by the company via a court application.
Consent to Act as a Company Director or Company Secretary
Recording the appointment of a company director or company secretary previously required their consent via signature on the appropriate form (forms AP01 - AP04) which was then filed at Companies House. Under the provisions of the new Act, no such signature is required and companies need only complete the new versions of forms AP01 – AP04 to confirm the consent of the director or secretary to the appointment. Old versions of these forms are no longer accepted by Companies House.
A new version of the company incorporation form, IN01, has also been introduced. As with the new company appointment forms, the filing of this form without signatures is enough to signify consent to act from the first directors and secretary of a new company.
Once the appointment of a company director has been filed and recorded on the public register, Companies House issues a letter to the appointed individual; confirming receipt of the notice of their appointment and explaining their general statutory duties. This goes some way to protecting against a person being appointed as company director without their agreement.
Director’s Date of Birth
As a means of preventing identity theft, the Registrar of Companies now omits the day of a director’s date of birth when it is listed on the public register of directors. Merely the month and year of a director’s birth will be publicly accessible, however, some public authorities and credit reference organisations may have a right to require the full date of birth of a director from the Registrar of Companies. Therefore, a director’s day of birth will still need to be supplied on the forms IN01 and AP01 even though it will not be published on the register.
Accelerated Company Strike Off Procedures
There are always a number of companies which have ceased to be in operation or don’t appear to be continuing business and therefore require removal from the Companies Index. The length of time it takes for the Registrar of Companies to strike off such companies has been reduced from 5-6 months to 3-4 months. Similarly, where companies volunteer to be removed from the Index, this process has been shortened from 3-4 months to 2 months.
UPCOMING CHANGES TO THE COMPANIES ACT 2006
Although the Small Business, Enterprise & Employment Act 2015 became law earlier in the year, the corporate aspects are being brought into force on a phased basis. Amongst others, the following amendments to the Companies Act 2006 will be introduced over the upcoming months:
Falsely Appointed Directors
A simple process will be implemented to remove directors from the register in cases where they were wrongly appointed. This may occur, for example, when a director did not consent to an appointment.
Registered Office Disputes
A remedial system will be in place for instances where a company registers its office under an address that it does not have authorisation to use.
PSC Register to be kept internally
From April 2016, private limited companies will need to maintain a Register of People with Significant Control or ‘PSC Register’. The register must include the details of those with:
Companies will no longer be required to file an annual return
Rather, companies will simply need to submit a confirmation statement to Companies House at least once a year stating that all required company information has been sent to Companies House over the previous 12 months. Companies will be able to enjoy the flexibility of providing this confirmation at any point in the year and past issues of duplicate information on the annual return will be avoided.
PSC Register to be sent to Companies House and annual notifications to be provided thereafter
Companies must notify Companies House of any updates to their PSC Register at least annually. All information will be publicly available, except for the residential addresses and dates of birth of the individuals listed.
Statements of capital will be simplified
They will no longer need to show the amount paid and unpaid on each individual share. It will only be necessary to set out the aggregate amount unpaid on all the shares.
Private companies will have the option of electing to have certain registers available to the public at Companies House
This option does not require companies to hold corresponding registers at the company’s registered office. As such registers include the register of members and register of directors, companies may prefer to maintain the registers themselves in order to keep members’ addresses and the dates of birth of directors away from public inspection.
Directors’ disqualification regime updated
The current system for dealing with the misconduct of directors will be amended and improved.
The appointment of corporate directors will be prohibited
UK companies will no longer be able to appoint corporate bodies as directors unless the corporate entity falls within one of the few limited exceptions. Directors must therefore be natural persons and any existing corporate directors will lose their appointments a year and a day after this change is enforced.
WHAT THIS MEANS FOR YOUR COMPANY
With numerous legislative changes to company filing requirements taking effect periodically over the next two years, it is extremely important that your company remains informed and updated in order to maintain its compliance with the law. Your Articles of Association and any shareholders’ agreement or arrangements you have internally between business owners should be checked to ensure that they are up to date and work best for you and the company.
If you have any questions regarding the above, please contact Neil Pfister either by telephone on 01483 411538 or by email: firstname.lastname@example.org or speak to another member of our Corporate and Commercial Team.