The Small Business, Enterprise and Employment Act 2015Print publication
The Small Business, Enterprise and Employment Act 2015 has now received Royal Assent and will introduce a number of material changes to UK company law over the next 12 months. Three of the most significant are set out below.
Information on beneficial ownership – the new PSC register
The provisional implementation date is January 2016.
UK companies will be required to maintain a register of persons with significant control (PSCs). This will be separate to the register of members recording legal ownership of a company’s shares. The aim of this new PSC register is to ensure that individuals with significant beneficial interests or other controlling rights in a company are easily identifiable. Details of PSCs will be publicly available online via Companies House.
The 2015 Act includes detailed provisions to help determine who is a PSC and the government has also established working groups to produce additional guidance. Currently, an individual will be a PSC if he or she:
- owns or controls more than 25 per cent of the shares or voting rights; or
- has the ability to appoint or remove a majority of the board; or
- has the right to exercise significant influence or control over the company.
Abolition of corporate directors
The provisional implementation date is October 2015.
Under the 2015 Act, UK companies will not be permitted to appoint corporate directors. The default position will be that all directors must be natural persons and existing corporate directors will automatically cease to be directors one year after the prohibition comes into effect.
The Secretary of State can make exceptions to this general rule and the government has consulted on what these exceptions should be. Originally the exceptions being considered were specific situations, for example, UK listed companies, large private or public companies within group structures and corporate trustee directors of pension funds. However, the government has recently announced that the responses to the original consultation “opened our eyes to practical uses of corporate directors that we hadn’t fully appreciated”. As a result, the government is now considering a “principles” based exceptions regime where a corporate director will be allowed if both the following conditions are met:
- all directors of the corporate director are individuals
- the law under which the corporate director is established (if not UK registered) requires
- details of the individual officers of the corporate director to be accessible through a public register.
Replacement of annual returns
The provisional implementation date is April 2016.
The existing annual return will be replaced with a confirmation statement to be filed at Companies House in every 12 month period, allowing a more flexible approach than the fixed reference date. This confirmation statement will cover similar basic information about the company as the annual return currently does and will also include details of the company’s PSCs.
Walker Morris comment
The Act has made it onto the statute book just before the General Election. The impression is that the government has deliberately left the more difficult aspects until after the General Election when there should be more time for fine-tuning – particularly how to deal with corporate directors. Watch out for further updates.