The Small Business Enterprise and Employment Act (“SBEE Act”) received Royal Assent on 26 March 2015 and has been in the process of implementation ever since. The introduction of the SBEE Act will make significant changes to company law in England and Wales and includes new measures designed to increase transparency in the ownership and control of companies.
The SBEE Act implements substantial changes to company law and corporate governance which will impact all companies not just small businesses.
Below is a timeline of implementation:
• May 2015 – Phase One
• October 2015 – Phase Two
• April 2016 – Phase Three
• June 2016 – Phase Four
• October 2016 – Phase Five
Bearer Shares Abolished
Companies who still have bearer shares on their records had 9 months to convert the bearer shares into registered shares. Any bearer shares not converted by the company before February 2016 have to make an application to the court to have them cancelled.
Director’s statutory duties were extended to shadow directors. The aim is to improve standards of shadow director conduct and increase accountability where standards are not met. The definition of ‘shadow director’ in the Companies Act 2006, the Insolvency Act 1986 and the Company Directors Disqualification Act 1986 is to be amended so as to bring further clarity to those to whom the definition applies.
Strike off Period is Shorter
The time it takes to strike a company off the register if it’s not carrying on business or operation is reduced from 6 to 4 months.
Directors’ Date of Birth
There will no longer be a requirement to include the day of a director’s date of birth on a company’s public register of directors, although companies will still be required to send these details to the Registrar. The month and year will still be available for inspection on the public register.
Consent to act as Director or Secretary
For newly appointed directors and secretaries, Companies House will add a statement to the relevant appointment and incorporation forms that the person has consented to act. Companies will then be required to agree to this statement, as part of this, Companies House will write to all newly appointed directors to make them aware that their appointment has been filed on the public register and explain their general statutory duties
Introduction of the Register of the Person of Significant Control
Companies and LLPs are required to keep a register of the person with significant control from this point.
A person with significant control is a person that meets at least one of the following five conditions:
1) directly or indirectly hold more than 25% of the nominal share capital; or
2) directly or indirectly control more than 25% of the votes at general meetings; or
3) directly or indirectly be able to control the appointment or removal of a majority of the board; or
4) actually exercise, or have the right to exercise, significant influence or control over the company; or
5) actually exercise or have the right to exercise, significant influence or control over any trust or firm (which is not a legal entity) which hassignificant control (under one of the four conditions above) over the company.
There is no requirement to file this register with Companies House until June 2016.
Annual Return Abolished
Companies will instead be obliged to deliver, once every 12 months, a “confirmation statement” in which companies would notify the Companies House of any relevant changes to previously filed information.
Private company registers may be kept at Companies House
Private companies will (with shareholder approval) be able to opt to keep certain information on the central public register at Companies House, instead of needing to maintain their own separate statutory registers (such as registers of members, directors, secretaries and directors’ residential addresses).
Prohibition of Corporate Directors
Companies are prohibited from appointing corporate directors, and after 12 months (i.e. in October 2016), existing corporate directors will cease to be directors.
However, the Government (Department for Business Innovation and Skills) is proposing to make exceptions to this rule and establish that a company may appoint a corporate director if both of the following conditions are satisfied:
• all the directors of the corporate director are natural persons (individuals); and
• the law under which the corporate director is established requires certain details of the “director” of the corporate director entity to be included in a publicly maintained accessible register (the questionnaire notes that this condition would not be needed if only UK companies are permitted to be appointed as a corporate director since director details in relation to UK companies must be filed at Companies House).
There will be some further limited exceptions; these are currently the subject of a Government consultation process and once we have this information we will update this briefing.
The key significant change will be the implementation of the register of person of significant control which affects both companies and the limited liability partnerships (LLP).
Consideration must be taken with regards to the type of group structure which is involved to ascertain person of significant control if trust structures are in place.
STEPS YOU CAN TAKE
1. Review corporate structures to assess the likely qualifying conditions.
2. Review your corporate directors and apply the exceptions.
3. Review Articles of Association, shareholders agreement, partnership agreements to understand who has control.
4. Ensure that the PSC register has been created.
For further information and guidance on the SBEE Act and other Company Secretarial matters, please do not hesitate to contact us.
The cookie settings on this website are set to "allow cookies" to give you the best browsing experience possible. If you continue to use this website without changing your cookie settings or you click "Accept" below then you are consenting to this.