A key piece of legislation has been introduced which all business should take steps to familiarise themselves with.
The Small Business, Enterprise and Employment Act 2015 has introduced a number of key reforms to company law. These changes are being implemented in a staged process during autumn 2015 and into 2016 meaning that companies may very well be required to take action now.
Register of People with Significant Control
From January 2016 companies will need to keep a register of people with ‘significant control’ over the company's business. A person with ‘significant control’ is defined as:
• a person holding more than 25 percent of the shares or voting rights in the company;
• a person holding the right to appoint a majority of the board of directors of the company; or
• a person who has the right to exercise or actually exercises a significant influence or control over the company.
Maintenance of this register is a continuing duty - companies will be required to investigate and update Companies House annually or risk committing an offence. Companies are well advised to start to consider who has ‘significant control’ of their business and how best to complete the necessary register.
Abolition of Corporate Directors
From October 2015 all directors should be natural persons; this means that companies can not be directors of companies other than in very limited circumstances.
Duty to publish report on payment practices
The Department of Business Innovation & Skills prompt payment reforms continue to gather pace with April 2016 being the start date for the next tranche of changes. Initially these regulations are likely to affect large private companies, and large limited liability partnerships who will be required to report on their payment processes and average payment terms. With only a few months until the anticipated start date now is a good opportunity to consider reviewing your companies internal procedures to ensure that the terms and conditions for the supply of goods and services which you use should be reviewed to ensure that the payment terms are within the spirit of prompt payment. In addition, companies should also consider reviewing how payment is reported internally in anticipation for external reporting in line with the regulations.
Registered Office disputes
Companies House can now challenge and ultimately reject inaccurate, ineffective or invalid registered offices. For companies, and in particular those operating a group of subsidiary companies it would be worth while ensuring all properties listed as registered address are correct and that the companies have the authorisation to use the property as a registered address.
Accelerated Strike Off
As an efficiency exercise the Registrar of Companies House can now strike off a company which appears to be no longer carrying on business or in operation; the process for doing this will take three to six months. The time for voluntary strike off is reduced and will now take two months.
It is crucial that businesses are aware of the changes that the new legislation is to introduce and what they need to do to remain compliant.
Martyn Tennant (firstname.lastname@example.org) and Alex Wilby (email@example.com), our Partners within our Corporate Team, are well placed to assist should you have any queries or require any training on the new legislation.