The Small Business, Enterprise and Employment Act 2015 - Update

In our article “The Changing Face of Company Administration” of June this year we discussed the adoption of the Small Business, Enterprise and Employment Act 2015 and the changes it would introduce to the company administration regime. With it being 8 months since the Act received Royal Assent and the changes being adopted gradually, this is a useful time to take stock.

• Bearer shares – as of 26 May 2015 companies are no longer allowed to issue bearer shares, i.e. shares for which a share certificate has been issued but which states no-one as their owner – the shares being owned by whoever physically holds the certificate. Moreover, any existing bearer shares are required to be either converted into non-bearer shares or cancelled by 26 December 2015.
• Shadow directors – with effect from May 2015 all statutory duties and responsibilities attaching to directors should also be applicable to shadow directors – persons whose directions or instructions are routinely followed by employees and directors of the company.
• Accelerated strike-off – from October 2015 the period for striking off the Register of Companies has been reduced. Non-trading companies undergoing the winding up process or companies which applied for a voluntary strike off will be now struck off within two (rather than three) months of the date of the Gazette notice.
• Disqualification of directors – a new ground for disqualification has been introduced which permits the Secretary of State to apply to the court to disqualify a person convicted of offences overseas in connection with promotion, formation or management of a company. Additionally the Act allows for a compensation order to be made against a disqualified director who caused a loss to a creditor of an insolvent company. Lastly, disqualification of an unfit director of an insolvent company can be applied for within three rather than two years.
• Consent to act – from October 2015 prospective officers of the company are no longer required to provide so-called “consent-to-act” information in order to be appointed. Instead, when notifying Companies House about the appointment, the company has to make a statement confirming that the director or secretary consented to the appointment. Companies House will in turn notify the newly appointed director, direct him or her to information regarding his or her legal duties and give an opportunity to the director to apply for removal from the public register on the ground that he or she did not consent to such appointment.
• Date of Birth – as of October 2015 the day of the date of birth of company directors is no longer available for the public to view. The change has been introduced to prevent identity fraud.

There are still a number of changes to enter into force and these include: (i) creation of the People of Significant Control register (containing details of beneficial owners of UK companies), (ii) abolition of Annual Returns and replacing them with a requirement to update company information at any time during a 12 month period; and (iii) abolition of corporate directors and replacing such with natural persons.

Companies should check whether any of the above applies to them and take appropriate action to ensure they do not fall foul of the new provisions. If you require any advice or assistance in relation to the introduction of this Act and its consequences, please contact Kirstin Ejsmont or call 01224 632 464.