Summer is not usually a popular time for legislative changes, but the first of the changes to corporate law made by the Small Business, Enterprise and Employment Act 2015 have now come into force.
This new Act has not had much press, but it does make some fairly significant changes that all companies should be aware of. They are coming into force in phases, and a summary of the main changes is set out below.
26 May 2015 – Shadow Directors
Shadow directors are now formally subject to the directors duties set out in the Companies Act. (section 170, Companies Act 2006)
October 2015 – Corporate Directors
A company will no longer be able to appoint a corporate director. Companies which currently have a company as a director (which is quite common and can be very useful in certain circumstances) will have such appointments terminated automatically in October 2016, so have a year to make other arrangements. (section 156A, Companies Act 2006)
January 2016 – Beneficial Ownership
Companies will be required to keep a register of all “persons with significant control” (PSCs) over the company. There are lengthy definitions of what “significant control” means, but for most the main criteria are that the person holds 25% or more of the shares or votes, or has the power to appoint or remove the majority of the board of directors. This provides more transparency in situations where ownership is complex. (part 21A, Companies Act 2006)
April 2016 – Companies House filings
- The PSC register (required to be kept by the company since January 2016) will also be required to be filed at Companies House.
- The annual return will be replaced by a simplified confirmation statement.
- The troublesome statement of capital required in certain Companies House returns will be simplified, including removal of the requirement to give the amount of premiums paid on shares.
- Companies may opt to file their registers with Companies House only and dispense with their own maintenance of such registers.
Summer may mean a quieter period for many businesses, and it would be prudent for companies to spend some time over the summer months preparing for the changes brought in with this new Act.
Alison Marshall is an experienced lawyer and business adviser offering business law and Intellectual Property advice to SMEs in Fife, Edinburgh and across Scotland