The Small Business, Enterprise and Employment Act

an introduction

The Small Business, Enterprise and Employment Act 2015 came into force in March 2015, bringing about far-reaching changes to UK company law.

A number of its provisions are aimed at enhancing the transparency around UK companies, as well as increasing trust in the UK generally as a place to do business and invest.

The provisions of the Act are coming into effect in stages, beginning in May 2015 through to April 2016.

To help you navigate these changes, we have outlined in this handy guide:

• what the key changes are

• when they come into effect

• what action you need to take.

Key questions for you to consider…• Areallyourshareholdersthetruebeneficialownersof

the shares?

• Are there people other than your shareholders who have significantinfluenceorcontrolofyourcompany?

• Do your shareholders hold shares through nominees trust structures?

• Are all your directors natural persons?

• Do you have any bearer shares?

If you have answered yes or are not sure about the answers to any of the above questions, then The Small Business, Enterprise and Employment Act 2015 will affect you and you need to take action in response to this. Failing to comply to some of the provisions is an offence and shareholders may face sanctions including loss of voting rights and dividends.

Timeline of key changes

May 2015 October 2015 January 2016 April 2016

• Central Registry

• Abolition of Annual Returns

• Directors’disqualification

• Bearer Shares abolished • Director information at Companies House

• RegisteredOffice

• Register of Persons with SignificantControl

The Small Business, Enterprise and Employment Act 2015 – a summary of the key changes

DATE CHANGE EXPLANATION ACTION

May 2015 Bearer Shares abolished The issue of new bearer shares is prohibited. Companies will have until February 2016 to convert existing bearer shares to ordinary shares in their capital.

• Give notice to holders of bearer shares of their conversion rights.

• Apply to court to cancel bearer shares not surrendered for conversion.

• Amend articles of association to remove bearer shares provisions.

October 2015 Director information at Companies House

NotificationofnewdirectorappointmentstoCompaniesHousewillneedtodiscloseonlythemonthand year of birth on public records to provide increased protection for directors from identity theft. No “consenttoact”isrequiredtobesignedbyadirectorwhenfilingatCompaniesHouse.

Action required from October 2015.

October 2015 Registered Office CompaniesHousewillhaveauthoritytochangeacompany’sregisteredofficeifthereisavalidcomplaint that the company does not have the right to use that address.

Action required from October 2015.

January 2016 Register of Persons with Significant Control

• Allunlistedcompaniesmustcreateandmaintainapubliclyavailableregisterofbeneficialownershipforpersonswithsignificantcontrol(“PSCs”).Failuretocomplyisacriminaloffence.

• Most private companies will need to take action. Particular care will need to be taken if there are nominee shareholdings and/or trust shareholders in your company.

• Detailsofthefollowingpersons(legalentitiesornaturalpersons)mustbeincludedonthecompany’sPSC Register:

• persons who own or control more than 25% of shares/voting rights in the company

• persons who are entitled to appoint or remove a majority of the board of directors

• personswhohavetherighttoexercisesignificantinfluenceorcontroloverthecompany.

(Guidance expected to be published in Autumn 2015.)

Companies

• Review all nominee shareholder arrangements.

• Identify any registerable PSCs in the company and changes in such interests.

Shareholders and PSCs

• Notify the company of any registerable interest and of any change in such interest

• Companies may enforce sanctions on shareholders failing to comply with their request for information in connection with the PSC register. Sanctions can be:

• suspension of voting rights

• suspension of dividend rights

• restrictions on right to transfer shares.

April 2016 Central Registry Subject to shareholder approval, private companies will be able to elect to have their registers of members, PSCs and directors/secretaries maintained by Companies House.

Consider whether this is appropriate for your company.

April 2016 Abolition of Annual Returns Annualreturnswillbereplacedby“annualconfirmationstatements”tobesubmittedtoCompaniesHouse once in every 12 month period. These statements will include information from the PSC Register.

Action required from April 2016.

April 2016 Directors’ disqualification ThedisqualificationregimeundertheCompanyDirectorsDisqualificationAct1986hasbeenexpandedto include reference to directors' conduct in connection with the formation and management of overseas companies.

Action required from April 2016.

To be determined Abolition of corporate directors All directors must be natural persons, not corporate directors. After 1 year, all corporate directorships will automatically terminate unless an application for exemption is successful. Proposed exemptions include quoted companies, AIM companies, some very large private companies in group structures and charitable companies.

• If there are corporate directors, check the company’s Articles of Association to understand the effect of the cessation of corporate directorships.

• Take advice as to exemptions.

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Tel: +44(0)2037556000 Fax: +44(0)2036507000

www.howardkennedy.com @howardkennedy_

For more information, please contact:

Michael HarrisPartner: Head of M&AT:+44(0)2037555488E: michael.harris@howardkennedy.com