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Technical updates // 21/12/2015

Small Business, Enterprise & Employment Act 2015 – All You Need To Know

New legislation will require company owners to provide additional information to Companies House. The Small Business, Enterprise and Employment Act 2015 introduces the Register of Beneficial Owners, which requires companies to submit details of all individuals who have at least 25% control.

The register comes into effect on the 1 April 2016. As with the Annual Return, there will be a yearly requirement to update the document; however, changes should be updated when they arise.

The legislation requires submission of details of owners with 25% control, but the process for determining control is complex. It addresses direct and indirect control, as well as dilution of control, which is particularly relevant if the UK Company is part of a global group.

The public register will contain the following details:

  • Name, country, nationality and date of birth
  • Service address, residential address
  • Date the individual became required to register
  • Nature of his/her control and restrictions on using/disclosing the individual’s particulars.

Small Business, Enterprise & Employment Act 2015 Requirements

There is a requirement to provide the residential address. However, individuals can opt to disclose only their service address in the public domain.

The new legislation is part of the government’s drive to make the UK a global leader in corporate transparency and accountability. It wants to build confidence and trust in the wider business community. The register is a new statutory requirement, and although much of the information is consistent with the Annual Return, it is not intended to replace this document, as least at this stage.

The legislation will have an impact on UK companies that are owned by a foreign parent that relies on corporate anonymity, such as an offshore trust or a US company registered in Delaware. Current reporting only requires disclosure of the name of the parent company, but from April 2016 it will be necessary to list the names of the ultimate beneficial owners.

We expect penalties for non-compliance to be strictly enforced. They start at a £1,000 fine, but can be as much as two years’ imprisonment. There are also fines for failure to comply with information duties, and for making misleading or false statements.

Other changes

The legislation also requires directors or the company secretary to consent to appointment. This addresses an omission in the existing rules. It also extends directors’ general duties to shadow directors. Corporate directors will be removed, as will the issue of share warrants, and the time to strike-off companies will also be reduced.

The new legislation also gives private companies the option to maintain their statutory records at Companies House. Some may see this as progressive step, but it puts on public record more information than is currently necessary, so our expectation is that this is unlikely to be widely taken up.

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