A brief note on the Small Business, Enterprise and Employment Act
On 26 March 2015, the Small Business, Enterprise and Employment Bill received Royal Assent and is now the Small Business, Enterprise and Employment Act 2015 (the Act).
The Act covers a number of areas of legislative reform, the stated aim of which was to reduce the barriers that can hamper the ability of small businesses to innovate, grow and compete. It is intended to open up new opportunities for small firms to innovate, compete and get finance to create jobs, grow and export
The main measures that affect companies aim to:
- reduce red tape whilst increasing the quality of information on the public register, and
- enhance transparency and ensure the UK is seen as a trusted and fair place to do business.
All companies are or will be affected by at least some of the changes, as the measures will change legal requirements on companies, including what they file with Companies House – which will impact companies’ systems and processes. It is currently expected that changes will be implemented in three stages with those with the highest impact being delivered in the final stage.
The key changes
- May 2015
Share warrants to bearer (known as ‘bearer shares’) have now been abolished. Any existing share warrants will need to be surrendered within 9 month
Directors’ general duties to shadow directors
The Companies Act 2006 has been amended to provide that the general duties of directors apply to shadow directors where and to the extent they are capable of applying. The Secretary of State also has the power to make regulations concerning the application of general duties of directors to shadow directors. Also the definition of shadow director is amended. The definition is currently that a person is not to be regarded as a shadow director by reasons only that the directors act on advice given by him in a professional capacity. This is now expanded to make it clear that directions or instructions given in exercise of a function conferred by or under legislation is not sufficient to meet the definition, nor is any advice or guidance issued by a Minister of the Crown
Exclusivity clauses in zero-hours contracts
Any provision of a zero-hours contract which prohibits the worker from doing work or performing services under another contract or under any other arrangement, or prohibits him or her from doing so without the employer’s consent, is unenforceable against the worker.
National Minimum Wage strengthened.
The maximum financial penalty for underpayment of the national minimum wage has been increased to £20,000 per worker.
- October 2015
A prohibition on appointing corporate directors will be introduced with some limited exceptions. Any company with an existing corporate director will need to take action, to either explain how they meet the conditions for an exception or give notice to the registrar that the person has ceased to be a director.
Date of birth
Partial suppression of date of birth will take place on the public register by suppressing the day element for directors and for people with significant control (PSC’s).
A simpler way will be afforded to get falsely appointed directors’ details 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 statutory general duties.
Registered office disputes
A new process will be offered to provide a remedy where a company is using an address for its registered office but never had authorisation.
The time it takes to strike companies off the register will be reduced.
- January 2016
People with significant control (PSC)
Companies will need to keep a register of people with significant control (‘PSC register’) from this point, in preparation for the need to file such information from April 2016 onwards.
- April 2016 onwards
‘Check and confirm’ – an alternative to the annual return
There will be a requirement to ‘check and confirm’ the company information and notify changes if necessary at least once every 12 months. This will replace the current obligation to file an annual return.
People with significant control (PSC)
Companies will need to keep a ‘PSC register’. This information will be filed at Companies House on incorporation and updated at ‘check and confirm’ times.
Companies will be able to deliver certain categories of optional information to the registrar.
Private companies will be able to opt to keep certain information on the public register only, instead of statutory registers. This will apply to the registers of members, directors, secretaries, directors’ residential addresses and the PSC register.
The disqualified directors’ regime will be updated and strengthened.
Statement of capital
There will be a simplification of the statement of capital and consistency throughout the Act.