The Small Business, Enterprise and Employment Act 2015 (the "Act") received Royal Assent in March this year. Certain provisions, namely the abolition of bearer shares and the requirement that directors' general duties were to apply to shadow directors, came into force in May 2015.
Some of the main provisions coming into force on 10 October 2015 include:
• Prohibition on corporate directors – the Act will amend the Companies Act 2006 and require that all company directors are natural persons. There will be certain specified exemptions to this prohibition, though the details of this are not yet finalised. Companies which have corporate directors that do not fall within any of the exemptions will have 12 months within which to remove and/or replace that corporate director. In any event, the appointment of a corporate director will cease automatically in October 2016.
• Appointment of directors – from October 2015 the forms notifying Companies House of the appointment of a director will include a "statement of truth" confirming the director has consented to act. New directors will then receive notice from Companies House that their appointment will be recorded on the public register, along with information about their statutory duties as a company director. The directors can challenge their appointment if they had not actually given consent. In this event, if the company is unable to provide evidence of such consent, the details of the appointment will be removed from the register. We are awaiting details as to what evidence will need to be submitted with the statement of truth and what evidence would be required for a company to defend a challenge to a director's appointment.
As a matter of best practice companies should ensure that they obtain a written consent to act from each new director to be filed with its statutory books, alongside any other evidence required by the Act (once details are available).
• Directors' date of birth – to counter concerns about the risk of identity theft (as a result of directors' dates of birth being publicly available) from October, only the month and year of a director's date of birth will be on public view. It will however, still be necessary for the full date to be submitted at the point of appointment. Please note that the full dates of birth of existing directors will not be removed from the register.
Plan ahead, there are significant changes are coming in January 2016:
• Register of people with significant control – from January 2016, most companies will be required to maintain a register of people who have "significant control" over the company. This "PSC Register" will not need to be made publicly available until April 2016 but will need to contain particular details of any individual or company which (directly or indirectly):
holds more than 25% of the company's shares or voting rights;
has the right to appoint a majority of the board of directors; or
has the right to exercise (or actually does exercise) a significant influence or control over the company.
Further guidance is expected to be published in October 2015 providing more details about the specific requirements and the details to be published. Regulations (which are not yet available) will also provide a "protection regime" in respect of any individuals who have significant control over a company and who are at serious risk of violence or intimidation.
What can you do now?
• If you have any corporate directors within your group, consider whether you fall within any of the exemptions (when the information is available). If not, then consider whether or not you need to replace these corporate directors with individuals.
• Ensure you obtain written consent to act from any individual who is appointed to the board of directors.
• Consider whether there is an individual (or individuals) with significant control over any company or companies within your group. Do you have any internal mechanisms in place to identify and store any information relating to such individuals? If you are an individual who exerts significant control over a company or companies, be aware that your information will be made publicly available from April 2015.
Do you need to consider whether you will fall within a "protection regime"?
For more information, please contact Jonathan Priestley or Amy Wright..‹‹ Back to articles