Companies House Red Tape Reduced

New legislation makes life a little easier for small business

The Small Business, Enterprise and Employment Act 2015 received royal assent on 26th March, introducing a number of measures designed to reduce red tape for companies, improve transparency and deter illegal activities such as money laundering and tax evasion.

Amendments will also be made to both the Companies Act 2006 and insolvency legislation to accommodate the new changes and implementation will take place in three stages within an 18 month period following enactment of the Small Business, Enterprise and Employment Act 2015 as follows:

26th May 2015

Abolition of bearer shares

Bearer shares are a rarity nowadays. Legal title of these shares belongs to whoever happens to be in possession of the share certificate at any given time. As such, no record of ownership is maintained by the issuing company.

Any remaining bearer shares will have to be surrendered within 9 months and companies will have to provide notice to bearer shareholders informing them of their rights to surrender. Failure to do so will result in the shares being cancelled.

Shadow directors

A shadow director is defined in the Companies Act 2006 as a person in accordance with whose directions or instructions the directors of a company are accustomed to act (although a person is not deemed to be a shadow director simply because the directors act on advice given by him in a professional capacity).

The general duties of directors as laid down in sections 170 – 177 of the Companies Act will apply to shadow directors as far as they are capable of applying.

October 2015

Corporate directors

Companies will be prohibited from appointing other companies and corporate entities from becoming directors. Any breach of this rule will be an offence. Any corporate entity that has an existing corporate director will have a one year transitional period in which to appoint replacement directors.

There are to be some exemptions and the Department for Business, Innovations and Skills has proposed that this should only be granted if all the directors of the proposed corporate director are natural persons and have their details held on a publicly accessible register. Companies will be required to explain to Companies House how any corporate directors fall within the exemption.

This change is designed to prevent corporate structures from hiding illegal activities.

Director filing and registration requirements

Where a director has been newly appointed, companies will have to make a statement that the director has consented to act following which Companies House will contact that person to make them aware of the appointment and to provide them with information about their roles and duties as a director.     

This measure has been introduced to reduce fraudulent appointments.

Directors personal information

In a further attempt to tackle fraud, only the month and year a director is born will appear on the public register. However, there does not appear to be any requirement for historical data to be removed, so for existing directors there will be little benefit.

This will also apply to persons with significant control.

Registered office disputes

Where there is a dispute involving a registered office address, Companies House will be given the power to change that address if a company cannot provide proof of eligibility/authorisation to use such address.

Striking off

Companies wishing to be dissolved will only have to wait for 2 months rather than 3 months after the publication of notice in the Gazette to be struck off.

January 2016

People with significant control (PSC)

Companies will be required to maintain a ‘PSC Register’ so as to provide clarity of ownership and control. ‘Significant control’ is defined by five conditions:

1. direct/indirect ownership of more than 25% of a company’s shares;
2. direct/indirect control of more than 25% of a company’s voting rights;
3. direct/indirect right to appoint/remove a majority of the board of directors;
4. exercise/right to exercise significant influence or control over a company; and/or
5. exercise/right to exercise significant influence or control over activities of a trust or firm which itself satisfy one of the first four conditions.

April 2016

Annual return

This is to be scrapped and replaced with an annual ‘check and confirm’ statement. The confirmation statement will also be simplified by removing the requirement for companies to include the amount paid up and unpaid on each share. Instead, companies will be required to specify the total amount unpaid on the total number of issued shares.

PSC Register

This will have to be filed with Companies House and kept updated on a ‘check and confirm’ basis.

Company registers

Private companies will be given the option of maintaining certain information on the Companies House register, e.g shareholder information, directors, secretaries. Companies House will however charge for this service and therefore companies should consider maintaining their own registers, particularly if changes are infrequent.

Additional information

Companies may, if they so wish, provide the Registrar of Companies with certain categories of additional information, e.g number of employees, description of main activities, operating sites.

Director disqualification

It will become easier to pursue errant directors who will be able to be sued by those who suffer losses due to their misconduct.

Directors overseas misconduct will be able to be taken into account when disqualifying a director.

Following insolvency of a company, the Secretary of State will have 3 rather than 2 years to initiate disqualification action against a director.

Companies House changes

The three current services provided by Companies House, Webfiling, Webcheck and Companies House Direct will be replaced by one service called The Companies House Service. However, during its implementation the three current services will operate alongside it. Other changes include:

• A free of charge Companies House Direct service rather than subscription-based;
• All document images (including mortgage charges) to be accessed free of charge;
• An improved and user-friendly interface to make searching for information easier and swifter.