Insights

On 26^th March 2015, the Small Business, Enterprise and Employment Bill gained Royal Assent and became an Act.

Business Secretary Vince Cable is quoted as saying:

“Small businesses provide jobs for millions of people across the country and are driving economic recovery. The Small Business Act will create the right environment for small businesses to continue to thrive by giving them greater access to finance to help them innovate and grow, and make it easier for them to export goods and services made in Britain. The Act’s measures also mean that there is nowhere to hide for firms who do not play by the rules, whether by abusing zero hours contracts or not paying minimum wage.”

Business Minister Matthew Hancock said:

“The government has backed small businesses like never before to build a Britain where entrepreneurs can break the mould and take on the world. There has never been a better time to start and grow a business in the UK”.

The Act will help small businesses by:

• Opening up access to small business credit data, making it easier for small businesses to seek a loan from a lender other than their bank;
• Introducing ‘cheque imaging’ to speed up cheque clearing times;
• Cutting down on regulatory red-tape;
• Promoting greater trust and transparency, making it easier to access information held at Companies House;
• The creation of a publically accessible register of people with significant control over a company;
• Strengthening the rules on director disqualifications to widen matters of miscount to be considered by the courts, including misconduct in overseas companies, and measures to help creditors recoup losses resulting from director misconduct;
• Reforming employment tribunals including reduction of delays and penalties for late and insufficient payment of tribunal awards;
• Streamlining insolvency law to remove unnecessary cost and ensure effective oversight of insolvency practitioners, so they deliver their services at fair and reasonable cost, that reflects the work undertaken;
• Introduction of a Pubs Code and Adjudicator to govern the relationship between large pub-owing companies and their tied tenants and bringing fairness to sole trader and small business pub owners;
• Assisting small business expansion overseas, increasing the support available from UK Export Finance and widening its powers, making it easier for small businesses to expand into the international marketplace;
• Streamlining public procurement to remove barriers so that small businesses can gain better and more direct access to public contracts.

Whilst the Small Business Act is undoubtedly small business-friendly, there are some significant changes that will take place at Companies House as a result,. All small businesses will be affected by the changes, particularly what they file at Companies House. The internal systems and processes of small businesses will be affected also.

Here’s how the Small Business Act will affect you in terms of your dealings with Companies House:

It is expected that the changes will be implemented in three stages, those with the highest impact being implemented last.

26th May 2015 – Share warrants to bearer (“bearer shares”) will be abolished. Existing share warrants will need to be surrendered in 9 months.

October 2015 – Corporate directors will be prohibited with certain exceptions. This will follow a comply or explain procedure. The day element of the date of birth of directors and People with significant control (PSC) will be suppressed. Procedures will be simplified to remove falsely appointed directors and unauthorised registered addresses. The company strike-off process will be shortened.

January 2016 – Companies will need to keep a register of people with significant control (‘PSC Register’). This will need to be filed at Companies House from April 2016.

April 2016 – Check and confirm will replace the current annual return. This is a requirement to ‘check and confirm’ company information and notify any changes at least once every 12 months. The PSC register will need to be filed at Companies House and maintained, using ‘check and confirm’. Company registers are currently held privately. There will be an option to keep these on the public register. This will apply to the register of members, directors, secretaries, directors’ residential addresses. The statement of capital will be simplified and kept consistent throughout the Act.

RJP welcome the spirit of the Act in that it will reduce red tape and improve the quality of information held on the public register. We believe that it will be good for our clients to operate in an environment where transparency and trust are enhanced and where the UK is seen as a fair place to do business.

The PSC register will contain information on individuals who ultimately own or control more than 25% of a company’s shares or voting rights, or who otherwise exercise control over the company and its management. These persons are often different from the persons listed in the company’s register of member or shareholders. This could prove to be quite an interesting document! The PSC register will be available for public inspection and will be searchable online via Companies House. The introduction of the PSC register is part of the UK Government’s G8 commitments to greater corporate transparency. The UK is leading the way on this, with similar moves now put in motion at EU level as part of the 4^th Money Laundering Directive.

If you would like to discuss what the Small Business Act means to your business and how best to plan to be compliant, please contact Colette Reeves by emailing cosec@rjp.co.uk