Company law changes June 2016
Further changes to company administration
The latest raft of changes to UK company law, brought in by the Small Business, Enterprise and Employment Act 2015, will take effect on 30 June 2016. These involve the replacement of the annual return with an annual confirmation statement, the option for private companies to stop holding their own statutory registers and instead to maintain these registers on the public record at Companies House, and simplification of the requirements for statements of capital on forms filed at Companies House.
The 2015 Act also introduces a prohibition on corporate directors. The latest proposed implementation date for this change is October 2016, but we are still awaiting the Government's response to its consultation on the exceptions which should be made to this prohibition.
The annual return is being rebranded as the confirmation statement. The name change implies there will be less work involved, in that companies will not have to re-submit information which has already been filed, but in practice there will be little difference for most companies as they already file their annual return online and simply confirm the pre-populated information.
The confirmation statement will largely cover the same information as the annual return, with the significant addition of information on the company's people with significant control (PSC) from the new PSC register which should be maintained by the company from 6 April. Although all information on PSCs must be passed to Companies House, residential addresses and the day (but not the month and year) of the date of birth will not appear on the public register.
Companies exempt from the requirement to maintain a PSC register will have to include a statement that they are so exempt, unless they are exempt because they are quoted companies required to comply with DTR 5 of the Financial Conduct Authority's Disclosure and Transparency Rules.
In relation to information on members of the company, there is no change for quoted companies. Private and public unquoted companies will no longer be required to supply a full list of shareholders every three years, but only to detail changes in membership in the relevant period.
Whereas, in filing its annual return, a company is confirming that the details in the return are correct, the confirmation statement is wider as it covers all filings the company has been required to make up to the date of the statement. This will include, for example, details of directors' residential addresses which do not appear in the annual return. In our experience, the need to file notice of a change of director's residential address is often overlooked.
Where the confirmation statement is made up to the last possible date (that is, 12 months after the last annual return or confirmation statement) the company will have only 14 days in which to file it, rather than the 28 days allowed for filing the annual return. However, even where a confirmation statement is made up to an earlier date, the time for filing it is still 14 days after the last date to which it could have been made up.
The 14 day deadline could mean that information about recent changes must be filed as part of the confirmation statement before it would otherwise need to be filed. For example, if there is an allotment of shares shortly before the confirmation date, the statement of capital for the confirmation statement may need to be updated to reflect this, before the one month deadline for filing the SH01 return of allotment. In some circumstances, it may be desirable to file an early confirmation statement before a significant corporate transaction, and then to follow this with a further confirmation statement once filings relating to the transaction have been made.
The last date to which an annual return can be made up is 29 June 2016. Companies with a return date of 30 June will be the first to file the new confirmation statement.
At present, companies are required to maintain a number of statutory registers, which are available for inspection at their registered office or another inspection location which is notified to Companies House. In addition, much of the information on these registers is also required to be filed at Companies House and appears on the public register there.
From 30 June 2016, 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)
It does not apply to registers of allotments and registers of transfers, which many companies keep. However, maintaining these registers is not a statutory requirement.
A company can elect to stop holding its own register of members only if all members have assented to this in advance, and it can elect to stop holding its own PSC register only if it has notified all registrable individuals and legal entities on its PSC register at least 14 days in advance and none of them has objected. The historic versions of both these registers, up to the date of the election to stop maintaining them, must be retained by the company and kept available for inspection.
Whilst there may be some attraction for some small, owner-managed companies in taking up this option and reducing the administrative burden, there are some issues to consider.
Where a register is held on the public register at Companies House, certain information will be more easily accessible to the public who will be able to find it on the public record rather than having to inspect the company's own books. This includes shareholders' addresses and the day of the date of birth of directors and PSCs.
In addition, information about PSCs and members will need to be kept up to date on the public record if the company does not maintain its own registers, rather than the information on the public record being updated only once a year with the confirmation statement.
A person only becomes a member when they are actually entered on the register of members. If this is held at Companies House, the precise timing of this ceases to be under the company's control.
Statements of capital
A statement of capital is required as part of the annual return / new confirmation statement and various other forms which have to be filed at Companies House. Currently, the statement must state the amount paid up on each share, including nominal amount and any premium. This has caused problems for companies with a complex share capital history, as it can be difficult, if not impossible, to attribute a specific amount of share premium to each share in issue. This can be because records don’t exist or as a result of previous re-organisations of share capital.
In relation to any statement of capital received by Companies House on or after 30 June 2016, the requirement to show the amount paid up and unpaid on each share has been removed. Instead, the statement should show the aggregate amount unpaid on the total number of shares.
This amendment to the statement of capital also applies to any annual return made up to a date before 30 June 2016 which is delivered to Companies House on or after that date.