The Small Business, Enterprise and Employment Act 2015 (SBEE) first came into force in March 2015 – ((GOV.UK “The Small Business Enterprise and Employment Act” )). There was implementation in later stages and over a number of years and, and it had the aim of improving transparency and trust in UK businesses, along with reducing bureaucracy. Despite the name, the law applies to all UK companies, both large and small.
What Changes did the SBEE Introduce on Transparency and Bureacracy?
These were numerous and included:
- Free digital public access
The law allowed free access to digital Companies House information, rather than a subscription model, and the user’s face was made more user-friendly.
- Ban on corporate directors
It introduced a ban on corporate directors (entities rather than individual people) subject to some limited exemptions in a bid to improve transparency and ensure identities are verified.
- Duties apply to shadow directors
For shadow directors, general duties will apply to these in equal measure as with normal director, “to the extent that they are capable of applying”
- Statement of capital
Statement of capital was simplified. The changes remove the requirement to show the amount paid up and unpaid on each share. Instead, directors need to show the aggregate amount unpaid on the total number of shares, which is more useful for shareholders and creditors as it shows money that is still due to the company.
- Ban on bearer shares
It also abolished bearer shares, which are those assigned to a warrant, rather than a registered owner. The warrant had allowed the bearer holder to claim any ownership or rights attached to those shares.
- Need to publish payment practices and gender pay gap
Large companies and LLPs are now required to publish details of the payment practices and policies in dealing with small businesses to include payment terms and the average time to pay. Meanwhile, companies with 250 or more employees are required to publish information showing whether there are differences in the pay between male and female employees.
- Annual Return replaced with Confirmation Statement
The Annual Return was replaced with Confirmation Statement – companies will be required instead to ‘check and confirm’ company information and notify Companies House of these (if necessary) at least once every 12 months.
- Introduction of Register of People with Significant Control
It also introduced the Register of People with Significant Control (PSC register on 6 April 2016. This provides details of the individuals or entities who exercise significant influence or control over a company – this information must be filed at Companies House as part of the confirmation statement. A PSC is anyone in a company, who:
· owns more than 25% of the company’s shares
· holds more than 25% of the company’s voting rights
· has the right to appoint or remove the majority of directors
· has the right to, or exercises significant influence or control.
- Information on public register
For company registers, private companies were able to opt to keep certain information on the public register, instead of holding their own statutory registers. This applied to registers of members, directors, secretaries, and people with significant control. This is voluntary and a company can continue holding its own registers if they prefer.
- Easier removal of false details
A new measure provided a simpler way to have falsely appointed directors’ details removed from the register.
For newly appointed officers, a statement was added to the relevant appointment and incorporation forms (paper and electronic) that the person has consented to act in their relevant capacity – companies are required to agree to this statement. This replaced the previous consent to act procedure of providing a signature on paper forms and personal authentication on electronic filings.
When an application is received, the company in question will be asked to provide evidence the director ‘consented to act’ in their appointment. If sufficient evidence is not provided, this will result in the director’s appointment being removed from the register.
Further, if an appointed director did not consent to act in their appointment, they can also apply to have the notification of their appointment removed from the register.
As part of this, Companies House will write to all newly appointed directors to make them aware that their appointment has been filed on the public register and explain their general legal duties.
- Quicker dispute resolution over addresses
The law sought to stop disputes over addresses from becoming too drawn out and if there is a dispute that involves a registered office address, Companies House will have the power to change the registered office addresses if the company cannot provide sufficient evidence.
- Privacy update
In terms of improving privacy, only the month and year of birth will now be visible on the public register for directors and people with significant control. Directors can also request that their home address is not shown on the Companies House register and provide a service address instead.
Changes to the Insolvency Process
The Act sought to reduce red tape and speed up the insolvency process for businesses in England and Wales through amendments to the Insolvency Act 1986. The changes meant the abolition of creditors’ and contributories’ meetings as the default means of decision-making in insolvency procedures. A new deemed consent procedure means decisions are circulated of a proposed decision by the administrator or liquidator, which is deemed consented to by the creditors or contributories if a certain proportion of them do not object.
Faster strike-off times
The amount of time it takes for a company to be dissolved is reduced from three to two months after the publication of notice in The Gazette. Those objecting to a company being struck off, now only have two months to object, instead of three. For a compulsory strike-off, the time is reduced from five to six months to around three and a half months.
This was updated and new offenses were added to the current regime that individuals can also be disqualified for. These were disqualification for certain convictions abroad and disqualification of persons instructing unfit directors. The Act will also increase the period of time for applying to the court for disqualification of an unfit director of an insolvent company from two to three years.