Peeking Beneath the Corporate Veil
Published: 29 January 2015
The Small Business, Enterprise and Employment Bill is now being considered the House of Lords. It will affect corporations and contains the measures which will be of great interest to all of our coporate clients:
- Provisions designed to increase public awareness of the ownership and control of UK companies, including sanctions for those who hide their interests;
- Measures aimed at simplifying company filing arrangements; and
- Strengthening the rules relating to directors’ disqualification.
The Bill provides for the creation of a central registry documenting the beneficial ownership companies (i.e. persons with significant control or ‘PSCs’) which would apply to all companies be open to public inspection.
A ‘beneficial owner’ would be a person who ultimately holds 25% of the company’s shares or voting rights or who otherwise exercises control over the management of the company. This measure is accompanied by a ban on corporate directors, although there may be some exceptions so it will no longer be possible to create bearer shares. This means that all bearer shares currently in existence would have to be cancelled.
Also general directors’ duties towards their companies (set out in sections 170 to 177 of the Companies Act 2006) will now be extended to apply to ‘shadow’. What’s more, ‘shadow’ directors will also be brought into the ambit of the Insolvency Act 1986.
There are a number of measures in the Bill which are designed to ease the burden of company filing. The most significant change includes replacing the annual return with a yearly ‘check, notify changes and confirm’ regime. This will be of huge benefit to private companies as it will allow them to dispense with the maintenance certain of the statutory registers.
In this area, the Bill introduces the power to bring a disqualification order against any director on the grounds of offences committed outside Great Britain. Once again the Bill targets ‘Shadow’ directors as the Company Directors Disqualification Act 1986 is to be extended to apply to them.
On 15 January 2015 the Department for Business, Innovation and Skills (BIS) published a provisional timetable for implementing the transparency and filing measures of the Bill.
- Two months after Royal Assent – prohibition on bearer shares becomes effective and companies will then have nine months to convert existing bearer shares into registered securities.
- October 2015 – prohibition on corporate directors to come into force together with other measures including the registered office and the company strike off procedure.
- January 2016 – measures come into force requiring companies to maintain a register of PSCs although companies will have three months to file this information at Companies House.
- April 2016 – replacement of annual return and private companies to have the right to keep PSC information on the central registry at Companies House instead of maintaining their own register.
We will be keeping you up to date with the progress of the Bill but if you would like to discuss how the Bill will affect your company, or for further advice and assistance, please contact Consultant Solicitor Melvyn Ansher by email or telephone: 0207766 5260
The contents of this article are intended for general information purposes only and shall not be deemed to be, or constitute legal advice. We cannot accept responsibility for any loss as a result of acts or omissions taken in respect of this article.