New rules will require companies to keep publicly available registers showing people with "significant control" as well as details of the company's payment practices.
The Small Business, Enterprise and Employment Act 2015 (the "Act") was signed into law on 26 March 2015. The contents of the Act can be traced back to the UK's corporate transparency proposals, which were published following the 2013 G8 Summit. A variety of measures are set to be implemented over the coming months, which include: the abolition of bearer shares (May 2015), a prohibition on corporate directors (October 2015), and a requirement for annual confirmation of accuracy of information on the public register (April 2016). This article provides an overview of two of the significant reporting obligations that are provided for by the Act.
Register of people with significant control
Coming into effect from January 2016, this measure means that most companies will need to commence maintaining a register of people with 'significant control' of the company (the "PSC register") (although the information will not need to be made available on the public register at Companies House until April 2016).
The PSC register must include information about those with significant control who are also "registrable", in addition to particular details of registrable relevant legal entitles (who would have been a person with significant control if they had been individuals).
A person with significant control over a company is defined as an individual that meets one or more of the following conditions:
- the individual holds, directly or indirectly, more than 25 percent of the shares in the company,
- the individual holds, directly or indirectly, more than 25 percent of the voting rights in the company,
- the individual holds the right, directly or indirectly, to appoint a majority of the board of directors of the company,
- the individual has the right to exercise or actually exercises significant influence over or control over the company.
All companies will need to maintain a PSC register, other than those which are subject to Chapter 5 of the Financial Conduct Authority's Disclosure and Transparency Rules.
The PSC register must be available for inspection at the relevant company's registered office (unless it is kept on the public register at Companies House only) and, in addition, the information contained in the PSC register must be confirmed to Companies House every 12 months.
Notably, regulations will also establish a "protection regime", enabling individuals with sufficient control who are at risk of violence as a result of the company's activities, to have their information shielded from disclosure.
Duty to publish report on payment practices
The Act permits the Government to introduce a "prompt payment reporting requirement" on certain companies. This regime is expected to come into effect in April 2016, and is intended to serve as a response to growing concerns raised about the substantial problems caused to UK businesses (particularly small and medium sized businesses) by late payment.
UK large private companies, large quoted companies and large limited liability partnerships will have to report on their standard and average payment terms.
Companies will have to report on the proportion of invoices not paid within their period for payment, the proportion of involves paid in 30 days or less, the proportion paid between 31 and 60 days and the proportion paid beyond 60 days.
Reports will have to be prepared every six months, covering at least a whole six-month period, and they will need to be prepared within 30 days of the end of the relevant period.