There are significant upcoming changes to the law affecting UK private companies and LLPs.
The Small Business, Enterprise and Employment Act 2015 (SBEE) is now in force and measures are being phased in, aimed at improving the transparency of company ownership and simplifying company filings.
From a date to be confirmed, likely from June 2016, private companies will be entitled to elect that instead of holding certain information in statutory registers, that information can be maintained solely at Companies House.
Annual Returns/ Confirmation Statements
With likely effect from June 2016, a private company’s “Annual Return” will be replaced with a “Confirmation Statement”. This will be a statement to Companies House that the company has delivered all required information in the previous 12 month period.
From 6 April 2016, UK private companies will be required to maintain a register of “persons with significant control” (PSC) over the company.
This change is aimed at bringing “behind the scenes” company ownership and control into public view. It seeks to assist efforts to combat tax evasion, money laundering and the financing of terrorism.
A person or entity is a PSC if he/she/it (alone or with others):
- holds over 25% of the voting rights in the company;
- controls over 25% of votes at a members’ meeting;
- can appoint or remove a majority of the board; or
- does or can exercise significant influence or control over the company (or of any entity that itself has significant influence over the company).
As a result of the requirement to file a Confirmation Statement at Companies House (see above) the information on a company’s PSC register will be added to a new searchable online database.
A failure of either the company or a PSC to comply will be a criminal offence.
With some limited exceptions, companies will cease to be able to appoint a company to be a director, likely from October 2016.
Disqualification of Directors
The SBEE broadens the grounds for disqualification under the Company Directors Disqualification Act 1986.
The changes above, each of which apply to both companies and LLPs, are a combination of the government’s “red tape challenge” initiative, improved corporate governance, and moves towards broader transparency in company ownership.