The Small Business, Enterprise and Employment Act 2015 (the “Act”) received Royal Assent on 26 March 2015 and set a timetable for the staged implementation of various changes to company law. The first reform came into force on 26 May 2015, which imposed a prohibition on issuing bearer shares.
We consider some of the aspects of the Act which corporates and shareholders alike should be mindful of as these come into effect.
Abolition of bearer shares
As of 26 May 2015, a company is prohibited from issuing bearer shares, regardless of whether this is permitted under its Articles of Association. For companies that already have bearer shares in issue, the Act provides for a transitional period whereby holders of such shares have nine months to ‘surrender’ the shares to be cancelled and converted into registered shares. Companies must give several notices to shareholders of their rights to surrender. All rights attaching to bearer shares not surrendered by 26 December 2015 will automatically be suspended until the shares are surrendered, as long as this is before the end of February 2016.
The Act will insert a section into the Companies Act 2006 to prohibit the appointment of corporate directors. The Secretary of State, however, reserves a general power to make certain exceptions to the prohibition, although how this discretion will be exercised remains unclear.
The Act provides for a one year transition period, after which the general position is that any corporate director of a company will cease to be a director.
Initially, the change was to be implemented in October 2015 but a recent amendment has postponed this so it is unlikely to come into force until early 2016.
Concealment of a director’s date of birth
In an effort to tackle identity fraud, from October 2015 the day of a director’s date of birth will not appear on the public register at Companies House, with only the month and year being visible. Directors will still be required to supply Companies House with their full date of birth, including the day.
The day element of a director’s date of birth will not be removed from the register if this information was registered at Companies House before this new rule comes into force.
Removal of requirement to file an annual return
What may come as welcome news for many companies is the removal of the requirement to file an annual return at Companies House from April 2016. Companies will instead be required to deliver a ‘confirmation statement’ to Companies House stating that all required information has been provided including, for example, details of any change of registered office and details of certain company registers. In other words, the statement will confirm that the company’s filings are up to date so an accurate picture of the company’s directors, members, charges and so forth can be gleaned from a review of the filings.
A confirmation statement must be submitted to Companies House in every 12 month period within 14 days from the end of the relevant ‘review period’. This is a period of 12 months which begins with the day of the company’s incorporation. Subsequent review periods commence on the day after the end of the previous review period.
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