April 17, 2015 Governing Small Businesses
When the Small Business, Enterprise and Employment Act received Royal Assent at the end of March the headlines largely concentrated on measures taken to reduce late payments or to improve access to finance. But the Act actually has a much wider scope, governing a range of measures from employment and finance through to corporate governance and education. In this article we are concentrating on some of the Act’s clauses which relate to corporate governance but as the Act has implications for businesses of all sizes we would strongly recommended that all businesses take time to familiarise themselves with the provisions of the Act.
One of the key provisions of the Act relates to changes in respect of ownership and control of companies. These include the abolition of bearer shares and the requirement to keep a register detailing those deemed to have significant control over a company. We have already covered these measures in more depth in our news piece of the 6th March entitled “ownership and control – key changes.”
Whilst additional work may be required to maintain a significant persons’ register, the Act also seeks to reduce the administrative burden by simplifying company filing requirements. Measures include:
- Enabling companies to confirm the accuracy of registers at any point within a year rather than at a fixed point in time.
- Allowing companies to opt out of maintaining certain registers as long as the information is on the public register.
- Simplifying filing requirements in respect of director’s appointments.
- Simplifying the financial information which is required in the statement of capital.
The Act also aims to simplify processes and reduce costs in the event of insolvency or the striking off of dormant companies. However, the emphasis here is not just on protection for companies. The public too gain greater protection through a tightening of the regulations concerning director disqualification. This includes the ability for directors to be disqualified from taking office where misconduct has taken place in overseas companies and enabling proceedings to be taken against a person who has caused a director to be deemed to be unfit to take office.
Creditors too gain extra protection with measures aimed at increasing the levels of compensation available where loss has been occasioned by director misconduct. Creditors are also being encouraged to play a more engaged role in the event of insolvency alongside a streamlining of the insolvency process itself.