Changes to company law
A number of changes to UK company law are being introduced as a result of the Small Business, Enterprise and Employment Act 2015. Some are intended to increase transparency and trust in the UK business environment as part of the global agenda to tackle issues such as tax evasion, money laundering and terrorist financing. Others are measures to simplify company filing requirements in response to the Government's Red Tape Challenge.
The changes range from minor administrative matters to some that will have significant implications for many companies.
Abolition of bearer shares – in force 26 May 2015
It is no longer possible for a company to issue bearer shares, where details of the holder are not entered in the company's register of members and the shares are transferred by delivery of a warrant representing the shares.
Holders of existing bearer shares have until 25 February 2016 to surrender them to the company for conversion into registered shares. The company should already have published notice of conversion rights to bearer share holders on its website and in the Gazette, and must publish a further notice on or before 25 January 2016. If any bearer shares are not surrendered for conversion, the company will be required to apply to court to cancel them.
Companies which make provision for bearer shares in their articles can remove these provisions without the shareholders passing a special resolution. A copy of the amended articles must be filed at Companies House.
Director disqualification – in force 1 October 2015
A wider range of matters will be taken into account in determining whether a director should be disqualified, including the director's track record, the impact of his behaviour on others and overseas convictions and misconduct.
The time limit for bringing disqualification proceedings has been increased from two to three years and co-operation between the Insolvency Service and sectoral regulators will be improved.
Insolvency practitioners are now able to assign claims against directors to creditors and the court is able to make compensation orders where creditors have suffered identifiable losses.
Directors' dates of birth and consent to act – in force 10 October 2015
Although companies still have to provide a director's date of birth to Companies House, only the month and year (not the day) will be available to those searching the public register (although information already registered will remain available). This is intended to help reduce the risk of identity theft.
Instead of new directors and secretaries indicating their consent to act by signing or authenticating the form sent to Companies House, the company is required to confirm their consent has been given. When the appointment of a new director is registered by a company, Companies House will contact the person concerned to notify them that they have been entered on the public register as a director and directing them to information about their duties.
Faster strike off procedures – in force 10 October 2015
Companies House are able to strike unresponsive companies off the register more quickly than before, and the process for voluntary striking off has been speeded up.
Director and registered office disputes – expected implementation date April 2016
There will be a simpler way to remove directors' details from the register if they have been falsely appointed, for example, if the person concerned has not consented to act.
Companies House will be given power to change a company's registered office on receipt of a complaint that the company is not authorised to use that address.
Requirement for companies to maintain a PSC register – expected implementation date April 2016
Companies (other than quoted companies subject to the significant shareholder regime under the Disclosure and Transparency Rules or equivalent disclosure requirements in an EEA state) will be required to identify individuals and legal entities who have ultimate ownership of more than 25% of their shares or voting rights, or the right to appoint or remove a majority of the board, or who exercise significant influence or control over the company (persons with significant control or PSC).
For further information, download our briefing paper.
Annual return replaced by "check and confirm" – expected implementation date June 2016
Annual returns will be replaced by a requirement for companies to check and confirm to Companies House, at least once a year, that they have delivered all the required information.
Companies will be required to include PSC information in this confirmation, so that this will become available on the public register. As with directors, only the month and year of a PSC's date of birth will be generally available to the public.
Company registers – expected implementation date June 2016
Private companies may decide to keep certain registers (including the register of members, registers of directors and their residential addresses and the new PSC register) on the public record at Companies House, rather than keeping them at their registered office or other place where they can be inspected.
Statement of capital – expected implementation date June 2016
Certain Companies House forms include a statement of capital, requiring companies to include figures for the amount paid or unpaid on each share. This has caused problems for companies with a complex share capital history. The requirement will be simplified to require disclosure of the aggregate amount unpaid on the company's share capital.
Restrictions on having corporate directors – expected implementation date October 2016
Companies are currently permitted to appoint another company to be a director, provided that they have at least one director who is an individual.
Unless an exemption applies, companies will no longer be permitted to appoint corporate directors and any corporate director still in office one year after the restriction comes into force will automatically cease to be a director.
The Government initially proposed a number of limited exemptions, permitting corporate directors for:
- quoted companies, including AIM companies, and (possibly) other public companies;
- large private companies (but possibly only those within group structures);
- subsidiaries of the above types of company, where another group company is appointed as a director;
- some charitable companies; and
- corporate trustees of pension funds.
However, as a result of the responses to its initial proposals, it is now considering a general exemption permitting any UK company to appoint a corporate director, as long as both of the following conditions are satisfied:
- all of the directors (or equivalent officers) of the corporate director entity are individuals;
- the law under which the corporate director entity is established requires certain details of its directors to be included in a publicly maintained accessible register.
The proposed general exemption may be narrowed so that only a corporate entity registered in the UK can be appointed as a corporate director.
Additional information - expected implementation date late 2016 / early 2017
Companies will be able to deliver certain categories of optional information to Companies House.