Following the G8 Summit in June 2013, today's announcement formalises the UK Government's recent discussions on corporate transparency, simplicity and owner responsibility. The changes will be coming into force over a period of time.
Dentons' Restructuring and Insolvency team will be issuing a series of practical guidance notes on how these changes will impact the way our clients, and their counterparties, do business and manage themselves. We aim to generate debate on new business opportunities and work streams which arise as a result of the changes.
An overview of the main changes introduced are outlined below.
Corporate transparency (to discourage fraud), removal of red tape and corporate accountability
The Act will:
- create a central, publicly accessible registry of company beneficial ownership information;
- simplify and give greater access to many other company filings;
- require large and listed corporates to publicise their payment practices and policies;
- ban new, and cancel existing, bearer shares;
- ban corporate directorships (in most cases);
- apply general directors' duties to shadow directors;
- change the directors' disqualification regime: overseas misconduct will now be taken into account; and directors will be required to compensate those who suffer loss as a result of their misconduct;
- reduce the time it takes to strike off and dissolve a company from the public register.
Access to finance
The Act will:
- prohibit provisions which do not allow for assignment of receivables in contracts;
- regulate the provision of credit data on SMEs.
Consequential impact on the restructuring and insolvency profession
Regulatory changes will come into play, with the possibility that additional professional bodies will be introduced to facilitate and monitor these changes.
The Act also aims to streamline insolvency processes generally, by: removing creditors' meetings (as the default option); abolishing the need for sanction to certain actions; and reducing the need for reports and notices within insolvencies.
Most controversially, not only will the Act (at some time yet to be appointed) give administrators the power to bring wrongful and fraudulent trading actions, but it will also allow insolvency practitioners to assign those causes of action as well personal claims for preferences and transactions at undervalue to other interested parties. It also envisages future regulations covering sales to connected parties in administration.
Updates on the Act, and its implications, will be issued over the coming months.