Small Business, Enterprise and Employment Act 2015 (UK)
The Small Business, Enterprise, and Employment Act 2015 (SBEEA) has introduced new provisions which will amend the primary piece of legislation that governs companies in the UK, the Companies Act 2006 (the Act). The amendments are intended to increase transparency around controlling interests in both private and public companies and simplify company filing requirements at the Registrar of Companies (Companies House).
It is often the case that companies only realize that their records are not in good order when contemplating the sale of the business, taking on new investors, or entering into a new facility with a bank. For example, directors may find that the company books are not up to date, share certificates have not been issued, board meetings have not been minuted or Companies House records are inaccurate.
The new requirements introduced by SBEEA will add to the list of day-to-day compliance actions that UK companies should be taking as part of their corporate housekeeping. In addition, companies may need to review their anti-money laundering policies to ensure that they can accurately identify their clients as part of their client intake protocols.
SBEEA highlights the growing legislative trend towards transparency regarding share ownership in companies in the UK. No doubt similar provisions will be adopted in the near future by Crown dependencies such as Guernsey and Jersey.
Register of People with Significant Control
With effect from 6 April 2016, the Act will require companies (PSC Companies) to keep a register of people who have ‘significant control’ over the company (PSC Register). PSC Companies will be required by law to gather information from its shareholders and produce a register that will be made available to the public, subject to certain limited exceptions.
All private and public companies incorporated in the UK will be required to comply with these new provisions unless they are a company that already complies with Chapter 5 of the Disclosure and Transparency Rules. Companies which are admitted to trading on a regulated or prescribed market, such as the Main Market and AIM Market of London Stock Exchange plc, are therefore exempt.
Broadly, a shareholder is deemed to have ‘significant control’ in a PSC Company when such a person meets one or more of the following conditions:
The Act will set out interpretation rules
The Act will set out interpretation rules when determining whether the conditions are met and there is further guidance for trustees of trusts and members of firms.
The obligation to maintain a PSC Register does not currently apply to limited liability partnerships (LLPs). The Government has, however, issued a consultation paper in respect of LLPs, and draft regulations have been published confirming that an adapted version of the requirements will apply to LLPs, meaning they must also maintain a PSC Register with effect from 6 April 2016.
The PSC Register will include the required particulars of individuals and legal entities who are registrable. PSC Companies must take reasonable steps to identify any registrable individuals or legal entities and serve notice on them to provide certain information for the PSC Register. Individuals and entities will also be obligated by law to supply information to a PSC Company, principally when they have not already been identified by the PSC Company and know they should be included on the PSC Register.
A criminal offense is committed by the PSC Company and its officers for non-compliance with these new provisions and various sanctions apply to individuals and entities who do not comply with any requests for information by a PSC Company.
Guidance on whether a person is registrable and the particulars required for the PSC Register is set out in the Act.
The PSC Register
The PSC Register must be made available for inspection at a company’s registered office in the case of public companies, or in the case of private companies, it can be kept on the public register at Companies House. From 30 June 2016, PSC Companies will also need to send information from the PSC Register to the Companies House.
PSC Companies are strongly recommended to take action now to produce their PSC Register. If a PSC Company does not have any persons with significant control, it must still produce a PSC Register and state that fact.
The SBEEA introduced new provisions to the Act which prohibit the appointment of corporate directors. There is a transition period for companies which provides that one year after this section of the Act comes into force, all corporate directors cease to be directors. This remains subject to any further regulations being made as this provision is still being considered by the Department for Business, Innovations & Skills. The implementation date is currently scheduled for October 2016.
Company Registers and Filing Requirements
With effect from June 2016, companies will no longer be required to submit an annual return to Companies House and will instead submit a confirmation statement (“Statement”). The Statement will confirm that the company has delivered all of the information that it is required to deliver (such as details of a change of registered office and changes in directors and secretaries). Companies must deliver one Statement in each 12-month period but need not wait until the due date to file the Statement (the next 12-month period would begin one day after the Statement is delivered).
Companies will also have the option to maintain information from their statutory registers on the public record at Companies House, thereby removing the need to keep a separate set of statutory registers. The Act will set out the procedure which must be followed in order to do so.
Find out more about what we can do for you…