Since it came into effect in May 2015, the Small Business, Enterprise and Employment Act 2015 (the “Act”) has and will result in various amendments to the Companies Act 2006, and additionally, will regulate aspects of business structures and formations.
Whilst a number of these proposals have not yet been put into force, companies must be vigilant and aware of any changes that may be required, especially in relation to the employment of corporate directors, updates required to the company register and new
Implications of the Act on directors
Companies must identify and keep public a register of those persons with ‘significant control’ from January 2016 i.e. persons with over 25% of the shares/voting rights of the company.
It was clarified that shadow directors owe the same duties as named directors
Companies will no longer have corporate directors. This is expected to take effect from October 2015 and aimed at increasing transparency and to ensure control is registered. It will be an offence to appoint a corporate director after October 2015 and any appointment
will be rendered void. It is thought that there will be a one year transitional period where replacement directors can be appointed and it is likely a number of exceptions to this ban will exist if the appointment is for legitimate reasons.
Insolvency practitioners will be required to prepare conduct reports about directors within three months of the company’s insolvency. This will include anyone who was a director or shadow director three years prior to the date of insolvency.
There is an option for the Secretary of State to seek a compensation order, ordering that a disqualified director compensates an individual creditor on insolvency, if the circumstances justify this.
Implications of the Act on companies
Bearer shares will be abolished. Holders of bearer shares will have nine months from 26 May 2015 to exchange them for registered shares and be listed on the shareholders register, after which they will be cancelled. Companies must ensure they notify their holders
of these shares and the consequences that will apply should they not be exchanged.
It is expected that in April 2016 the changes to filing requirements for annual returns, statements of capital and information on company registers will come into force. Companies must deliver a confirmation statement to Companies House, confirming the filing
of these documents. This is thought to simplify the process of filing but the statement alone will not be sufficient unless the requisite documents have also been filed.
In April 2016 private companies will be given the option of keeping statutory information on the public register rather than maintaining its own register.
Should you have any queries regarding the subject matter of this article, or need any assistance in connection with company secretarial work, please contact
Luke Ainsworth, solicitor in the Corporate and Commercial Department at
email@example.com or telephoning 0161 829 2599.
The information and opinions contained in this article are not intended to be comprehensive, nor to provide legal advice. No responsibility for its accuracy or correctness is assumed by Berg or any of its partners or employees. Professional legal advice should
be obtained before taking, or refraining from taking, any action as a result of this article.