The Small Business, Enterprise and Employment Act is the government’s attempt at giving back control to UK businesses through reducing red tape and increasing transparency. The Act is composed of a variety of changes; the majority of which concern changes to Company Law and the way Limited companies are being administered. Some of the provisions set out in the Act have already taken effect. However, many will be introduced in the next 12 months.
So, what are the key changes – the good, the bad and the ugly?
The Good Since October 2015
Accelerated Strike Off
Companies are now struck off from Companies House quicker than ever before. Voluntary strike off is reduced from three/four months to two months and compulsory strike off is reduced from five/six months to just over three months. From April 2016
Annual returns replaced
It is expected that the annual return will be abolished and replaced with a confirmation statement. This statement will need to be filed at Companies House once a year or when changes are made to officers or share capital. Companies House will still charge an annual filing fee, but the process will be more flexible and require less administration work.
Private companies will no longer be burdened with keeping their own Company Registers up-to-date. Instead they can choose to keep this information at Companies House on the public register. This service is completely optional, but allows companies to keep the following at Companies House: Register of Directors’, Register of Directors’ Residential addresses (this one will not be available to the public), Register of Secretaries, The Register of Members (provided all members agree) and the Register of People (provided all members agree).
Some private companies will be able to file accounts simultaneously with Companies House and HMRC.
Date of Birth To prevent people’s identities being stolen, a person’s full date of birth will no longer be shown on the Companies House public register. Instead, only the month and year will be visible.
The Bad From October 2015
UK companies are no longer allowed to appoint a corporate body as a company director. Any company that has a corporate body as a director will need to resign the position (group structures with large listed companies, large private companies and charities are exempt). The aim of this change is to make it easier to identify who is actually running a company (basically private companies will no longer be as private as they were before).
The registered address of a company can now be changed by the Registrar of Companies if a complaint is made about an incorrect address. In these instances, companies will need to confirm their address and if no evidence is forthcoming, the Registrar of Companies will have the power to update the address to that of a director’s home. It is therefore advised that companies regularly check that the details held by Companies House are correct.
New Public Register
The biggest, most controversial change is set to come into effect from January 2016 and will make it compulsory for all UK companies to maintain a register of all parties who have a ‘significant influence or control’ over their company. The register will be made available to the public and will have to include anyone that meets the below criteria:
- Has the right to exert ‘influence or control over a company’
- Is entitled to 25% of Company shares (directly or indirectly)
- Is entitled to 25% voting rights of the company
- Has the authority to appoint, demote or remove a majority of the board of directors
The purpose of this register is to ensure the persons with significant control of a company are identifiable. To find out more about this change, read my blog ‘No Anonymity for Company Directors’.
As you can see there is a lot for companies to take in and a lot they need to be aware about. If you would like to discuss these changes in more detail please contact Barry Soraff .