There are a number of significant changes being implemented over the next 12 months through the Small Business, Enterprise and Employment Act 2015 which will materially reform company law in the UK. The key changes, which will affect all companies, including those in the housing and charities’ sectors, are expected to be implemented by October 2016.
So what are they and what should you be doing to prepare for them?
Information on beneficial ownership
Implementation dates: April 2016 (maintenance of a register), 30 June 2016 (publication on central register)
Companies will be required to keep details of individuals who ultimately own or control more than 25% of the shares or voting rights, or who otherwise exercise significant influence or control over the company or its management (i.e. people with significant control or “PSC”) to be included on a private and public register. The public register, referred to as the PSC register, will be freely available online.
All companies, particularly those in group structures, will need to consider whether they have an individual or organisation that is deemed to exercise significant influence or control and guidance on how to determine such a person or entity is due out shortly.
Information about gender pay gaps
Implementation date: March 2016
It is expected that all companies with over 250 employees will have to publish information showing whether there are differences in the pay of male and female employees by no later than 25 March 2016.
Reporting on company payment practices and policies
Implementation date: April 2016
Large companies (i.e. those with over 250 employees and/or a turnover of over £36m and/or a balance sheet total of more than £18m) may be required to publish details of their business to business payment practices. Companies will need to report twice a year and publish the report on the company’s website. Large companies will be required to disclose information including:
- payment terms
- average time taken to pay
- the proportion of invoices paid beyond agreed terms
- the proportion of invoices paid in 30 days or less, between 31-60 days and over 60 days
- any late payment interest owed and paid.
Changes to information filed at Companies House
Implementation date: October 2015, December 2015 and April 2016
- Director and secretary consent (October 2015): The current regime of requiring newly appointed directors and secretaries to complete a consent to act (i.e. forms AP01 – AP04), will be removed and replaced with an obligation on the company to make a statement that the director or secretary has consented to act.
- Date of birth (October 2015 for directors and June 2016 for PSCs): The day on which directors and PSCs were born, but not the month or year, will be omitted from the public register
Abolition of annual returns
Implementation date: June 2016
Companies will no longer have to file annual returns. Instead they will be required to deliver a new “confirmation statement” stating the company has delivered all the information it was required to provide in the period to which the confirmation statement refers.
Abolition of corporate directors
Implementation date: October 2016
From October 2016, all directors will need to be natural persons and there is a prohibition on corporate directors. The new provision does enable the Secretary of State to set out exceptions to this general requirement but none have, as yet, been made. Companies with corporate directors on their board need to start giving some thought as to which individuals may be appropriate replacements. Corporate directors will automatically cease to be directors 12 months after this provision comes into force.
One of the Government’s intended purposes behind the Act is to make the structure and management of organisations more transparent, not only to deter illegal activity but also to restore the public’s faith in the way they are run. There is also a determination to reduce the amount of red tape businesses have to negotiate but only time will tell if this objective has been achieved. If you have any concerns about how these changes might impact on your organisation, or how to implement them, please contact Keith Ainsworth.