The Small Business, Enterprise and Employment Act 2015 (SBEE) received Royal Assent in March 2015 with a number of changes having been implemented in stages since this date. Contrary to its name, the SBEE affects all UK companies, irrespective of size, and covers a range of matters, part of which has the aim of enhancing the trust and transparency of UK businesses and improving the quality of the information available on the public record.
This note provides a summary of some of the key corporate provisions so far implemented under the SBEE and those which are yet to be brought into force.
What has the SBEE brought about this year so far?
Goodbye to annual returns
On 30 June 2016, annual returns (filed by companies and LLPs on an annual basis) were abolished and were replaced with the confirmation statement, which seeks to reduce the administrative burden placed on companies and LLPs. The confirmation statement is less cumbersome than the annual return as companies and LLPs simply need to ‘check and confirm’ information at Companies House and advise of any changes from the previous filing (rather than having to provide all necessary information again).
Company officers and designated LLP members are responsible for delivering a confirmation statement to Companies House at least once every 12 months. The filing deadline is 14 days after:
- the anniversary of company registration, or
- the anniversary of the last annual return ‘made-up’ date (now replaced by the ‘confirmation date’).
The PSC register
The Register of People with Significant Control (PSC register) is now live. Introduced on 6 April 2016, the PSC register is a register of information which, broadly, provides details of the individuals (known as PSCs) or entities (known as RLEs) who exercise significant influence or control over a company with the aim of increasing transparency as to who controls them and who might be making decisions as to how they are run.
With effect from 30 June 2016, PSC register information must be filed at Companies House (as part of the confirmation statement) so the information is freely publicly available via the Companies House’s online search portal.
The majority of companies and LLPs need to comply with the provisions or risk being convicted of a criminal offence (listed companies are broadly exempt). Likewise all PSCs and RLEs will need to provide the required information or risk being convicted of a criminal offence. It should be noted that there is no defence available to a company, LLP, PSC or RLE for a breach of the provisions.
Option to use central company registers
An option is now available to private limited companies to maintain, in part, their statutory registers at Companies House. This option only relates to the following company registers required to be maintained by law:
- the register of members
- the register of overseas branches
- the register of directors, and
- the register of directors’ residential addresses
Companies can, with shareholder approval, elect to keep these company registers at Companies House, rather than maintain internally. However, companies will still be required to keep the registers it held before the election took place as a historic record and there will still be an on-going obligation to notify Companies House in order to keep the registers up-to-date.
Enthusiasm for this service may be limited, as where companies keep and maintain their own company registers, they are able to keep control of recording any changes in shareholding promptly without the risk of delay that may come with reporting to the registrar.
What is yet to come?
Ban on ‘corporate’ directors
The ban on ‘corporate’ directors was expected to be implemented in October 2016. However, the introduction of the ban has been delayed with no new implementation date being given. Companies House has updated its website to state: ‘you won’t be able to appoint corporate directors, although there are some limited exceptions. The detail of these exceptions is still under development. Any further information including a date for implementation will be provided on GOV.UK as soon as it’s available.’
Companies should be alive to this pipeline change and may wish to begin compiling a list of any group companies with corporate directors on the board, give consideration to individuals who may be suitable replacements and check articles of association to see whether the quorum for board meetings will be affected. The SBEE states that, once introduced, the ban will have the effect of automatically ceasing the directorships of any corporate directors 12 months following the implementation date.
Reporting of company payment practices and policies
Under the SBEE, large companies and LLPs will be forced to publish details of the payment practices and policies in dealing with small businesses. This reporting duty was expected to come into force in April 2016 but it is now anticipated to take effect in early 2017.
It is expected that companies will be required to report bi-annually and to publish the reports on the company’s website. Large companies are expected to be required to disclose a number of provisions including:
- payment terms
- average time taken to pay
- the proportion of invoices paid beyond agreed terms
- the proportion of invoices paid in 30 days or less, between 31 to 60 days, beyond 60 days
- any late payment interest owed and paid
Gender pay gap reporting
The SBEE requires regulations to be brought into force requiring businesses (with 250 or more employees) to publish information showing whether there are differences in the pay of male and female employees. The publication of the Equality Act 2010 (Gender Pay Gap Information) Regulations 2016, a draft of which was released in February this year, has been delayed. Under the draft Regulations, the first information must be published in April 2018 but it should be noted that this will relate to:
- employee pay details in the pay period including 30 April 2017
- employee bonuses paid between 1 May 2016 and 30 April 2017
There is still a certain amount of uncertainty over the detail of gender pay gap reporting but companies can take steps to prepare for these reporting requirements by carrying out a pay audit to identify any gender pay gap within the business, assess the reasons for any gaps and plan a strategy to address them.