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2015.04.03 - United Kingdom: Small Business, Enterprise and Employment Act 2015.

 

On 26 March 2015, the UK Small Business, Enterprise and Employment Act 2015 (SBEE Act 2015) has received Royal Assent.

The abovementioned Act consists of 12 parts and 165 sections, covers more than 280 pages and applies to many areas of the UK economy, including financing of business, financing of educational institutions, changes in the insolvency procedure, and even regulation of pubs (Pubs Code), being an important part of the British economy and society.

Also, the Act contains new regulations in relation to the procedures of establishing and further maintenance of companies in the United Kingdom. These introductions are aimed to increase the confidence of the international business to the United Kingdom as a generally recognised financial and banking centre; inter alia by means of increasing of transparency for companies registered in the United Kingdom.

Some clauses of the SBEE Act 2015 come into force at different times within next 12 months.

The most relevant changes in relation to the procedures of establishing and maintenance of companies in the United Kingdom included in the SBEE Act 2015 are as follows:

1. Abolition of Bearer Shares. Section 84 of SBEE Act 2015 makes the following amendments in the UK Companies Act 2006:

“No share warrant [to bearer] may be issued by a company (irrespective of whether its articles purport to authorise it to do so) on or after the day on which section 84 of SBEE Act 2015 comes into force.”

This clause shall be in effect from 26 May 2015.

2. UK Limited: directors to be only natural persons. Whereas earlier, in accordance with the Companies Act 2006, a UK Limited company was required to have at least one director who is a natural person, section 87 of SBEE Act 2015 amends the Companies Act 2006 as follows:

“A person may not be appointed a director of a company unless the person is a natural person. An appointment made in contravention of this section is void.”

This clause shall be in effect from 1 October 2015.

3. Register of people with significant control (PSC). As is known, UK Limited companies file with the Companies House a technical (non-financial) report - Annual Return, which will be replaced, after this provision comes into force, by the document Confirmation Statement to be filed with the Companies House each year, as well as at the incorporation of a new company. Confirmation Statement contain, among other information, also data on individuals with significant control (i.e. - physical persons de facto controlling 25% or more shares) in the company.

This clause shall be in effect from 1 January 2016, with a transitional period until 1 April 2016.

According to the current text of the Act, all its clauses directly apply to regular UK companies (Private Limited Company, Public Limited Company). Additional regulatory rules will be developed in respect to other types of companies existing in the UK, to specify the applicability of the Act to particular types of companies.

The full text of SBEE Act 2015 is available at:
http://www.legislation.gov.uk/ukpga/2015/26/pdfs/ukpga_20150026_en.pdf

Dates when particular sections of the Act come into force:
https://www.gov.uk/government/uploads/system/uploads/attachment_data/file/394937/BIS_15_34_Provisional_implementation_plan_for_Parts_7_and_8_of_SBEE.pdf

International Overseas Services comments:

1) At all times, the United Kingdom has been one of the most progressive jurisdictions, and its legislation largely serves as an example for other countries. The new law, undoubtedly, confirms that the UK course is prudent and corresponds to current global trends. In view of this law, ownership of a limited company in the UK may be treated as a kind of ‘quality certificate’, i.e. a confirmation of the businessman’s legitimate operations and his compliance with legislative regulations.

2) It is important to emphasize that no automatic filing of any data on ‘People with significant control’ with the registrar of companies is intended. During the transitional period, each limited company may choose its further status; i.e. - whether to comply with the new law, or to change the company to a different corporate tool (including the company from another jurisdiction), or other decision.

3) Also, it is important to bear in mind that the transparency is currently a global trend, and by adopting this new legislation the United Kingdom is not a unique exception; the country just technically outruns other jurisdictions. Considering this, it would be logical to anticipate that the majority of owners will retain their UK limited companies and will continue to operate them under these new conditions, adjusting the company structure in accordance with the criteria of the new legislation, where appropriate.

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