Blog article

The Small Business, Enterprise and Employment Bill

The Small Business, Enterprise and Employment Bill 2014-15 is currently making its way through Parliament and is due to gain Royal Assent in March 2015.  The Bill is designed to reduce the barriers that can hamper the ability of small businesses to innovate, grow and compete.

The Bill does mean change for co‑operatives registered as companies.  This post outlines the main changes and action points for such co-operatives.

October 2015

Changes to Corporate Directors

Companies will be prohibited from appointing corporate directors.  Some exemptions to the ban on corporate directors will exist in certain limited circumstances. The basis for the exemptions will relate to a situation where the use of corporate directors provides particular business benefits, where that coincides with areas of low risk of financial crime, high standards of corporate governance or high levels of disclosure or regulatory oversight.

However, in the vast majority of cases, any corporate director appointments will come to end 12 months after the enactment of the Bill.  Co‑operatives affected should take steps to:

  • Check and amend the articles of association if they make reference to corporate directors;
  • If necessary, take steps to fill vacancies on the Board;
  • Give notice to the registrar that the person has ceased to be a director; and
  • Amend the Register of Directors to record the relevant changes to the Board.

April 2016

Annual Return changes

The Annual Return will be abolished and replaced with a ‘check and confirm’ (C&C) process where companies will be required to check and confirm information with, or notify Companies House of any changes at least once in a 12 month period.  Although the scale of fees is yet to be set, a fee will remain payable on C&C.

Co-operatives should be aware that this change is coming.  However, no action is necessary as co‑operatives will still be able to continue to use the current fixed date set for filing annual return information with Companies House if they wish.

Changes to Company Registers

Private limited companies may elect to keep any or all of the following registers on public record at Companies House:

  • Register of members;
  • Register of directors;
  • Residential addresses;
  • Register of secretaries.

The information contained in these registers must be kept up to date and will be available for public inspection and download from the Companies Register.

Co-operatives should be aware that the change is coming.  Co-operatives that want Companies House to hold its registers must gain the unanimous consent of all the members of the Company before doing so.  However, if a co-operative still wishes to maintain its own registers at the Registered Office or SAIL address there is no need to take action.

Registered Office Disputes

There is currently no remedy for a member of the public whose address is falsely used by a company as its registered office address.  From April 2016, Companies House will request evidence from a company seeking to change its registered address that it is authorised to use that address. If sufficient evidence is not forthcoming or satisfactory, Companies House will be able to change a company’s registered office.  Currently, it is not clear as to what evidence will be requested, but co‑operatives should be aware that additional information may be requested from Companies House when filing the AD01.

Director Disputes

Currently, in order to be appointed as a director or secretary of a company, a signature or personal identification information (in the case of an appointment made electronically) is required. This current approach has led to the false appointment of directors. From April 2016, a company will be required to provide evidence sufficient to satisfy Companies House that a person has consented to act as a director for that particular company.  Currently, it is not clear as to what evidence will be requested, but co-operatives should be aware that additional information may be requested from Companies House when filing an AP01 or AP03.

Company Directors' Disqualification Act 1986 changes

Amendments to the Company Directors Disqualification Act 1986 will come into force which will increase the matters a court must consider when determining whether a person should be disqualified as a director and the period of any disqualification.  Co-operatives are reminded that a check should be made on the disqualified directors' register before making an appointment to the Board.

Full details of the Bill can be found at: http://s.coop/1v5yc

The Bill derives from the ‘Transparency of UK Company Ownership and Increasing Trust in UK Business’ consultation launched by Business, Innovation and Skills (BIS) in 2013.  Despite the title, the content of the Bill fails to consider co-operative businesses operating as societies under the Co‑operative and Community Benefit Societies Act 2014 because currently BIS has no role in legislating for societies, a function currently undertaken by HM Treasury.  Co-operatives UK, in its publication, ‘Co‑operative Call to Action 2015,’ recommends that UK business would be better served by giving one government department responsibility for setting the legal and regulatory framework for all business forms.

Written by Linda Barlow
Updated: 12/01/2015