The Small Business, Enterprise and Employment Act an introduction
The Small Business, Enterprise and Employment Act 2015 came into force in March 2015, bringing about far-reaching changes to UK company law. A number of its provisions are aimed at enhancing the transparency around UK companies, as well as increasing trust in the UK generally as a place to do business and invest. The provisions of the Act are coming into effect in stages, beginning in May 2015 through to April 2016. To help you navigate these changes, we have outlined in this handy guide: • what the key changes are • when they come into effect • what action you need to take.
Key questions for you to consider… • A re all your shareholders the true beneficial owners of the shares? • Are there people other than your shareholders who have significant influence or control of your company? • Do your shareholders hold shares through nominees trust structures? • Are all your directors natural persons? • Do you have any bearer shares? If you have answered yes or are not sure about the answers to any of the above questions, then The Small Business, Enterprise and Employment Act 2015 will affect you and you need to take action in response to this. Failing to comply to some of the provisions is an offence and shareholders may face sanctions including loss of voting rights and dividends.
Timeline of key changes May 2015
• Bearer Shares abolished
October 2015
• Director information at Companies House • Registered Office
January 2016
• Register of Persons with Significant Control
April 2016
• Central Registry • Abolition of Annual Returns • Directors’ disqualification
The Small Business, Enterprise and Employment Act 2015 – a summary of the key changes DATE
CHANGE
EXPLANATION
ACTION
May 2015
Bearer Shares abolished
The issue of new bearer shares is prohibited. Companies will have until February 2016 to convert existing bearer shares to ordinary shares in their capital.
• Give notice to holders of bearer shares of their conversion rights. • Apply to court to cancel bearer shares not surrendered for conversion. • Amend articles of association to remove bearer shares provisions.
October 2015
Director information at Companies House
Notification of new director appointments to Companies House will need to disclose only the month and year of birth on public records to provide increased protection for directors from identity theft. No “consent to act” is required to be signed by a director when filing at Companies House.
Action required from October 2015.
October 2015
Registered Office
Companies House will have authority to change a company’s registered office if there is a valid complaint that the company does not have the right to use that address.
Action required from October 2015.
January 2016
Register of Persons with Significant Control
• A ll unlisted companies must create and maintain a publicly available register of beneficial ownership for persons with significant control (“PSCs”). Failure to comply is a criminal offence.
Companies
• Most private companies will need to take action. Particular care will need to be taken if there are nominee shareholdings and/or trust shareholders in your company. • D etails of the following persons (legal entities or natural persons) must be included on the company’s PSC Register: • persons who own or control more than 25% of shares/voting rights in the company • persons who are entitled to appoint or remove a majority of the board of directors • persons who have the right to exercise significant influence or control over the company.
• Review all nominee shareholder arrangements. • Identify any registerable PSCs in the company and changes in such interests. Shareholders and PSCs • Notify the company of any registerable interest and of any change in such interest • Companies may enforce sanctions on shareholders failing to comply with their request for information in connection with the PSC register. Sanctions can be: • suspension of voting rights • suspension of dividend rights
(Guidance expected to be published in Autumn 2015.)
• restrictions on right to transfer shares.
April 2016
Central Registry
Subject to shareholder approval, private companies will be able to elect to have their registers of members, PSCs and directors/secretaries maintained by Companies House.
Consider whether this is appropriate for your company.
April 2016
Abolition of Annual Returns
Annual returns will be replaced by “annual confirmation statements” to be submitted to Companies House once in every 12 month period. These statements will include information from the PSC Register.
Action required from April 2016.
April 2016
Directors’ disqualification
The disqualification regime under the Company Directors Disqualification Act 1986 has been expanded to include reference to directors' conduct in connection with the formation and management of overseas companies.
Action required from April 2016.
To be determined
Abolition of corporate directors
All directors must be natural persons, not corporate directors. After 1 year, all corporate directorships will automatically terminate unless an application for exemption is successful. Proposed exemptions include quoted companies, AIM companies, some very large private companies in group structures and charitable companies.
• If there are corporate directors, check the company’s Articles of Association to understand the effect of the cessation of corporate directorships. • Take advice as to exemptions.
For more information, please contact:
Michael Harris Partner: Head of M&A T: +44 (0)20 3755 5488 E: michael.harris@howardkennedy.com No. 1 London Bridge London SE1 9BG DX 144370 Southwark 4 Tel: +44 (0)20 3755 6000 Fax: +44 (0)20 3650 7000 www.howardkennedy.com @howardkennedy_