The Small Business, Enterprise and Employment Bill, published in June 2013, has now received Royal Assent. The Small Business, Enterprise and Employment Act 2015 (the “Act”) materially reforms UK company law and therefore may have a part to play in influencing whether investors consider that “UK plc” is a welcome place to do business. A provisional plan by BIS suggests the Act will be implemented in phases, beginning two months after its enactment, and will be fully in force by April 2016.
One of the confirmed changes, which builds upon the Government’s statement at the G8 summit in June 2013 (echoed at the G20 summit in November 2014) and which is perhaps the most controversial, is the introduction of a central public registry of those individuals who have significant control of UK companies. The Act however covers a number of legal areas, including the UK’s insolvency regime and other company law changes, for example the introduction of an accelerated strike-off procedure and changes to the director disqualification regime. This note summarises only the following key changes and looks at what, if anything, companies should be doing now to prepare for them:
- new register of “persons with significant control” (the PSC register);
- abolition of bearer shares;
- abolition of corporate directors;
- abolition of annual returns; and
- new option to keep company statutory books at the central registry.
KEY CHANGES TO CONSIDER NOW
New PSC register – January 2016 (estimated implementation date)
The Act sets out the interests and the details which will be required to be included on the new PSC register. Broadly the Act.
It is not yet clear how all of the provisions will be implemented. As mentioned above, guidance on determining whether an individual exercises significant influence or control is not expected to be published until the autumn making it difficult to consider the Act’s impact on transactional group structures. However, now the Act has received Royal Assent, companies and their shareholders may wish to start considering whether, applying the provisions in the Act that are in final form, they either have, or are, an individual who is deemed to exercise significant influence or control.
Abolition of bearer shares – May 2015 (estimated implementation date)
Bearer shares, shares that have been issued but where noone has been registered as the owner of the shares, will be abolished. No new bearer shares will be able to be issued and the legislation has been drafted so that companies which have issued bearer shares will be required to follow a detailed procedure to cancel any bearer shares that have not been converted into non-bearer shares. Ultimately this may require the company to apply to court. Companies should check their records now to ensure they can identify and contact those (if any) to whom bearer shares were issued. Once the provision is in force a prescribed procedure will apply which will require the conversion or surrender of shares within a fairly short timescale (the first notice must be sent within one month of the provision being effective).
Abolition of corporate directors – October 2015 (estimated implementation date)
Since 2008, all UK companies have been required to have a director who is a natural person (prior to that all directors could be corporate or other legal entities). The Act will require all directors to be natural persons. A door has been left open for the Secretary of State to exempt certain companies from compliance with this provision. Corporate directors may therefore (subject to the outcome of a consultation on possible exceptions) be permitted to continue to be appointed where the company is admitted to trading on a regulated or prescribed market or is a large private or public company operating in a group structure. Certain sectors may also be exempt..
OTHER KEY CHANGES
Abolition of annual returns – April 2016 (estimated implementation date) (estimated implementation date) doing so.
CONCLUSION
As a number of commentators have noted and the UK Government itself expressed, the change to transparency of UK company ownership and control is significant and the UK is leading the way internationally. The UK is clearly pushing for “international recognition of the need for change” and “ambitious global outcomes”. Whether the UK will be considered a welcome market leader in this area will be seen over the coming months as the Act’s reforms are implemented.