15 March, 2016
The Small Business, Enterprise and Employment Act 2015 (Act) received Royal Assent on 26 March 2015. Although many of the Act’s provisions have already come into force, those provisions being implemented in 2016 represent significant change for private limited companies (Companies) and Limited Liability Partnerships (LLPs) throughout England and Wales.
The Act aims to create a more transparent platform for business through a variety of measures and most significantly, requires Companies and LLPs to maintain a register of Persons with Significant Control (PSC). The Act also allows Companies to rely on certain information kept at Companies House in place of maintaining their own statutory registers.
Persons with Significant Control (PSC)
From 6 April 2016, all Companies and LLP’s will be required to maintain a register of PSCs and, from 30 June 2016, file the information contained on the register at Companies House. Under the Act,
Companies are under an obligation to take reasonable steps to identify and maintain the required information for entry on their PSC register. Failure to comply with this obligation will be a criminal offence.
A person with significant control is someone who meets one or more of the following criteria:
The requirement to maintain this register, coupled with the abolition of bearer shares in May 2015, will make it increasingly difficult for anybody to play a significant role in a Company or LLP without being traceable through the information held at Companies House. The one saving grace for those persons falling within the PSC regime is that Companies House has confirmed the residential address and full date of birth of anybody whose information is filed will not be made publicly available.
From June 2016, the Act will permit Companies to elect to keep certain information on the public register in place of the requirement for Companies to keep their own statutory registers. The registers that can be elected to be maintained at Companies House are as follows:
For Companies who elect to maintain their corporate information in this way, information will be provided to Companies House by way of a yearly Confirmation Statement, which is the document created by the Act as a replacement for an Annual Return. In order to elect to participate in this new regime, all shareholders of the Company must assent to the election and that election must then be filed and registered at Companies House.
Although the provisions of the Act surrounding statutory registers would appear to make life easier for Companies generally, the main limitation where this approach is adopted is that it relies upon the information filed at Companies House to be correct. Furthermore, the requirement to notify Companies House of share movements in between the filing of a Company’s yearly confirmation statement will add an additional layer of administration to share transfers.
In addition to the above, the Act has a wide range of other consequences for Companies and LLPs. If you would like advice on your own business needs in this field please do not hesitate to contact a member of the Company & Commercial team for an initial no obligation discussion on 01202 294 566.