The Small Business, Enterprise and Employment Bill (“Bill”) may bring about the biggest changes to company law since the Companies Act 2006 received Royal Assent in November 2006. It also proposes some key changes to employment law, but this blog will only focus only on the corporate aspects of the Bill.
The Bill aims to make the UK a more trusted and fairer place to do business by removing the uncertainty behind the ownership of UK companies.
The Bill is currently going through the usual process which is required before it can come into force. It is expected to receive Royal Assent some time in 2015. Some of the key proposals are as follows:-
Companies will be required to keep a public register of persons with significant control over the company. Significant control has been defined as those people who, directly or indirectly:
(a) hold or control more than 25% of shares in the company;
(b) hold or control more than 25% of voting rights; or
(c) are otherwise able to exercise significant influence over the company.
This requirement will apply to all UK companies and limited liability partnerships unless they comply with Chapter 5 of the Financial Conduct Authority’s Disclosure Rules and Transparency Rules.
This will therefore affect any companies which have nominee arrangements in place over more than 25% of its share capital.
Corporate directors will be prohibited and any existing corporate directors will have to cease being directors of any UK company within 12 months from the relevant provisions coming into force.
The creation of new bearer shares will be prohibited. Any existing holders of bearer shares will be required to cancel those shares, or otherwise convert those bearer shares into registered shares, within 9 months of the relevant provisions coming into force. Any companies that have authority in their articles of association to issue share warrants, will be permitted to amend their articles of association for the purpose of removing such authority, without the need for a special resolution.
The existing requirements for companies to file an annual return will be replaced by a requirement to provide a statement of compliance to Companies House. Companies will have to confirm at least once in every 12 month period that the company information held at Companies House is correct and complete. If the company information is not correct then companies will be able to simply update that information.