The Small Business Enterprise and Employment Bill – how it may affect you

OCS Solicitors RGBThe Small Business, Enterprise and Employment Bill is currently in the House of Lords and is expected to get Royal Assent in the Spring, before the general election.

The Bill will make some key changes to Company Law and the anticipated timescale will see implementation over the next two years in three stages.

 

This important draft legislation covers a miscellany of topics, including access to finance, public sector procurement, childcare, insolvency and employment.

The most significant measures in the Bill that are likely to be of particular interest to UK companies are:-

  • the abolition of corporate directors; and
  • a requirement on all private UK companies to maintain a register of any individuals who have “significant control” over the company.
Corporate Directors

The Bill contains provisions which would require all company directors to be individuals. The government has said that the existence of corporate directors in a business, where a business rather than a person acts as a director, can restrict transparency, help to mask illegal activity, and ultimately negatively impact on the economy.

It is likely that the only exceptions to this measure will be for UK companies with shares trading on regulated or prescribed markets, such as the LSE or Alternative Investment Market (AIM).

The transition period for companies with corporate directors provides that October 2016 any remaining corporate directors will cease to be directors.

Significant Control

The Bill will:-

  • require companies to keep a register of people with “significant control” over the company, and to make that register public
  • impose duties on companies to gather information, and obligations on others to supply information, to enable that register to be kept
  • give private companies the option of using an alternative method of record-keeping
  • include provisions excluding certain material from the information available to the public

 

The new register must be made available for inspection at its registered office will contain information on individuals who ultimately own or control more than 25% of a company’s shares or voting rights, or who otherwise exercise control over the company and its management. All private and public companies incorporated in the UK will have to maintain a PSC register, except those publicly-traded companies which already report.

 

An individual with significant control will be a person who:

  • holds, directly or indirectly, more than 25% of a company’s shares;
  • is entitled, directly or indirectly, to exercise (or control the exercise of) more than 25% of the voting rights in a company;
  • is entitled, directly or indirectly, to appoint or remove (or control that appointment or removal) of a majority of a company’s directors; or
  • has the right to exercise significant influence or control over a company.

 

There are equivalent provisions relating to the powers of trustees to exercise this “significant control” over a company, and to joint interests and arrangements held or entered into by two or more persons.

The register will contain the individual’s name, service address, country of residence, nationality, date of birth, usual residential address, the date on which they became registrable on the register, and the nature of his or her control over the company.

The requirement for companies to keep a register of persons with significant control will come into force in January 2016 with the obligation to file this information at Companies House taking effect three months later.

 

For further information relating to the above and how this might practically affect your business, pleased contact Jonathan Williamson of Oury Clark Solicitors at jonathan.williamson@ocsolicitors.com or call 0207 0674300

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