The Small Business, Enterprise and Employment Act received Royal Assent in March 2015. It’s expected to be implemented to the timescales set out below.
The measures that affect companies aim to:
- reduce red tape
- increase the quality of information on the public register
- enhance transparency
The Act intends to provide a boost to the economy, making it easier for businesses to find the valuable information they need. It should also ensure the UK is seen as a trusted and fair place to do business.
All companies will be affected in some way, as the measures change legal requirements on companies, including what they file with Companies House. This will impact your company’s systems and processes.
The changes with the highest impact will be delivered in the final stage, giving you more time to get your company ready.
Changes may still happen as secondary legislation passes through Parliament. We will keep you updated and release more information as this becomes available.
26 May 2015
Share warrants to bearer (known as ‘bearer shares’) were abolished.
These were shares issued by a company, but assigned to a warrant, rather than a registered owner. The warrant allowed the bearer holder to claim any ownership or rights attached to those shares.
As the owner’s details did not need to be entered into the register of members, it was sometimes difficult to establish ownership of those shares.
In keeping with the government’s focus on business transparency, this measure means all shares must have a designated owner.
If your company has bearer shares
If this affects your company, your bearer shareholders have 9 months (from 26 May 2015) to surrender their warrants voluntarily. These can then be converted into registered shares, and the bearer shareholder will enter their name into the register of members.
Your company should take steps to ensure bearer shareholders know their rights to surrender their warrants, and the consequences if they don’t.
Consequences of not surrendering share warrants
If the share warrants haven’t been surrendered within 7 months (from 26 May 2015), all rights are automatically suspended. Bearer shareholders can’t vote or claim dividends from the shares. They will also be unable to transfer the warrant, as any transfers made after the 7 month period are void.
If the share warrants haven’t been surrendered within 9 months, the company has to make an application to the court to have them cancelled.
10 October 2015
Date of birth
Partial suppression of date of birth on the public register: suppressing the day element for directors.
It has always been a requirement of the Companies Act 2006 for directors to provide a full date of birth. This measure provides you with more protection by suppressing the day of birth on the public record.
The full date of birth will still be needed to be provided to Companies House, but will no longer be shown in full on our data products or on images or new filings.
Your full date of birth will only be disclosed in exceptional circumstances (for example to credit reference agencies, or to public authorities). This procedure is similar to how residential addresses are protected.
You will still need to enter your date of birth into the register of directors,PSC register or both.
The time it takes to strike a company off the register if it’s not carrying on business or operation has been reduced.
The accelerated strike-off process aims for the right balance between removing a defunct company from the register and allowing creditors time to register an objection.
Under old legislation, if no objection was received, the company was struck off not less than 3 months after publication of a notice in The Gazette. Under the new timescales, the company is struck off not less than 2 months from publication of the Gazette notice.
If you’re waiting for a company name to become available, faster company strike off means this will happen slightly sooner. However, if you want to prevent your company from being struck off, it’s even more important for you to keep your company record up to date.
If you are objecting to a company being struck off, this also means you now have 2 months to object, instead of 3.
Companies House is not re-advertising a first Gazette notice once a valid objection has expired. If you previously relied on this as a prompt to renew your objection, it’s important to realise this no longer happens. All objections need to lodged within 2 months of the first gazette notice.
Consent to act as an officer
Replacement of the ‘consent to act’ procedure.
For newly appointed officers, a statement was added by Companies House to the relevant appointment and incorporation forms (paper and electronic) that the person has consented to act in their relevant capacity.
Companies are required to agree to this statement. This replaced the previous consent to act procedure of providing a signature on paper forms and personal authentication on electronic filings.
As part of this, Companies House will write to all newly appointed directors to make them aware that their appointment has been filed on the public register and explain their general legal duties. See also the new director disputes procedure.
This measure provides a simpler way to get falsely appointed directors’ details removed from the register.
If an appointed director didn’t consent to act in their appointment, they can apply to have the notification of their appointment removed from the register.
When an application is received, the company in question will be asked to provide evidence the director ‘consented to act’ in their appointment. If sufficient evidence isn’t provided, this will result in the director’s appointment being removed from the register.
This proof might be that the company has retained a statement from the director that they have ‘consented to act’.
Registered office address (ROA) disputes
A new process to help when a company is using an address for its registered office without authorisation.
Where a complaint is received that a company or a limited liability partnership (LLP) is wrongly using an ROA, Companies House will investigate. If the registrar is satisfied that a company or LLP is not entitled to use an address, he will have the power to change the ROA of that company or LLP to the ‘default’ address.
The registrar can nominate a default address for each jurisdiction (England and Wales, Scotland or Northern Ireland).
Any post sent to a company at the default address will be held at the relevant Companies House office.
Companies House offices won’t receive packages or bailiff visits for companies whose ROA has been changed to a default address.
Evidence of ROA
Acceptable evidence that a company has the right to use an ROA might be a document that shows it’s a building the company owns, one they rent, or an agreement from the owner that they are allowed to use the address as anROA.
The registrar will consider any evidence sent and advise both the company and the applicant the outcome. If the registrar can’t come to an appropriate decision, it may be referred to the courts.
People with significant control (PSC)
Companies and LLPs will need to keep a register of people with significant control (‘PSC register’) from this point, in preparation for the need to file this information at Companies House from 30 June 2016.
A PSC is anyone in a company or LLP who meets one or more of the conditions listed in the legislation. This is a person who:
- owns more than 25% of the company’s shares
- holds more than 25% of the company’s voting rights
- holds the right to appoint or remove the majority of directors
- otherwise has the right to exercise, or actually exercises significant influence or control
- holds the right to exercise or actually exercises significant control over an arrangement isn’t a legal entity (eg a trust), but would satisfy any of the first 4 conditions if it were an individual.
One of the reasons behind this change is to improve transparency around who owns and controls UK businesses. This is also a measure to improve the UK’s reputation as a fair place to do business.
BIS recently published guidance on the PSC register.
The PSC’s usual residential address won’t be available on the public register, and the day of birth will be suppressed. All other PSC information will be available on the public register.
There will be a regime for suppressing all PSC information and preventing residential addresses being provided to credit reference agencies in ‘exceptional circumstances’. This will be where there is a serious risk of violence or intimidation.
You’ll still need to comply with the requirements to send your PSCinformation to us, and the information will still be available to law enforcement.
Most of the details around PSCs will be set out in secondary legislation. We’ll update you when we know more.
A requirement to ‘check and confirm’ the company information by filing a ‘confirmation statement’, and notify changes if necessary at least once every 12 months. This will replace the current obligation to file an annual return.
People with significant control (PSC)
If your company was incorporated before 30 June 2016, you’ll also need to provide this information in your first confirmation statement.
Private companies will be able to opt to keep certain information on the public register, instead of holding their own statutory registers. This will apply to registers of:
- directors’ residential addresses
- people with significant control (PSC)
This is completely voluntary, and your company can continue holding its own registers if you prefer.
Outcomes to consider
If your company elects to hold registers information at Companies House, this becomes part of the public record.
For example, information such as shareholders’ addresses or directors’ days of birth would be protected when registers are held by the company. This information becomes part of the public record when the information is kept at Companies House.
Companies can opt in and out of holding register information on the public record at Companies House, but any sensitive information that was placed on the public record while register information was held at Companies House continues to remain part of the public record.
Registers that remain at the company’s ROA or single alternative inspection location (SAIL) continue to be bound to the normal inspection rules that currently apply. If the information is held on the public record at Companies House, it’s available for inspection to anyone via our website.
Companies House will implement the necessary changes to forms and systems to support the updated and strengthened disqualified directors regime.
From October 2015, new offences have been added to the current regime that individuals can also be disqualified for. These are:
- ‘disqualification for certain convictions abroad’
- ‘disqualification of persons instructing unfit directors’
The conduct of people instructing unfit directors can also be taken into consideration. If a director has been deemed unfit due to someone exercising control over the director, they could also be disqualified.
Statement of capital
Simplification of the statement of capital and consistency throughout the Act.
The changes remove the requirement to show the amount paid up and unpaid on each share. Instead, you now need to show the aggregate amount unpaid on the total number of shares. This figure is more useful for shareholders and creditors as it shows money which is still due to the company.
Currently, a statement of capital needs to be provided every year on the annual return. Instead, you can now simply show on the confirmation statement that there have been no changes for that year.
You will only need to provide a full statement of capital where changes have been made during the year. This will avoid you having to provide duplicate information to the registrar.
A prohibition on appointing corporate directors will be introduced with some limited exceptions. Any company with an existing corporate director will need to take action, either explaining how they meet the conditions for an exception or give notice to the registrar that the person has ceased to be a director.
Further detail on this and what it means for companies with corporate directors is being considered following a public consultation BIS held in April.