New fact sheets on changes to Small Business Act
A series of new fact sheets that outline changes in the Small Business, Enterprise and Employment Act have been published by the Department for Business, Innovation and Skills (BIS).
The fact sheets include information on a number of relevant reforms for chartered accountants and Insolvency Practitioners, including:
- Increased transparency of UK company ownership
- Abolition of bearer shares
- Simplification of company filing requirements
- Improved director disqualification regime
- Increased engagement and confidence in the insolvency regime
The BIS Companies Transparency Fact Sheet outlines two reforms aimed at deterring and identifying those who hide their interest in UK companies to facilitate illegal activities.
The Register of People with Significant Control reform is aimed at increasing transparency around who ultimately owns and controls UK companies. The reform will require UK companies to keep a register of people with significant control over the company available for inspection, known as a 'PSC register'. A 'person with significant control' is an individual who ultimately owns or controls more than 25 per cent of a company's shares or voting rights, or who otherwise exercises control over a company or its management.
The fact sheet also details a second reform, The Abolition of Bearer Shares, which will prohibit UK companies from issuing these shares. Bearer shares are unregistered shares owned by whoever is in possession of the physical stock certificate. This makes them anonymous and transferable, and an easy means of enabling illegal activities such as tax evasion and money laundering.
Company filing requirements reforms
Measures to simplify company filing requirements and improve the integrity of the public companies register are detailed in the BIS Company Filing Requirements Fact Sheet.
The reform will give companies the flexibility to check and confirm their information is correct at any time, instead of completing an annual return at a set time during the year. Companies will be able to opt out of the requirement to keep certain company registers and can choose to make additional information available on the public register. The measure is also designed to simplify the financial information contained in the statement of capital. Further changes can be viewed in the fact sheet.
Director disqualification reforms
The BIS Directors' Disqualification and Creditor Compensation Fact Sheet outlines measures to improve business and consumer confidence that directors involved in misconduct will be barred. The reform will also simplify the system for reporting director misconduct and introduce greater transparency into the disqualification regime.
Central to the reform is a streamlined process for Insolvency Practitioners to report on the conduct of every director of an insolvent company. The measure will also enable disqualification proceedings to take place in the UK where directors have been involved in misconduct in overseas companies. New measures to allow rights to certain legal claims against directors to be assigned by liquidators and administrators to third parties, and for the Secretary of State to issue compensation orders against directors who are guilty of misconduct, are also being introduced.
Three insolvency reforms are detailed in the BIS Insolvency Fact Sheets. As well as general insolvency reforms to increase creditor engagement and modernise communication methods, the fact sheets include information on new measures related to pre-pack administrations and the regulation of Insolvency Practitioners.
The pre-pack administration reforms provide reserve legislative powers, which will provide greater confidence to unsecured creditors and other affected stakeholders that a pre-pack represents the best outcome for them. The reserve powers are intended only to be used if non-legislative measures recommended by the Graham Report do not improve confidence in pre-pack administrations.
The regulatory reforms are aimed at strengthening the regulatory framework for Insolvency Practitioners by providing statutory objectives for regulators to work within and providing the Insolvency Service as oversight regulator a wider range of sanctions should a regulator not be acting in accordance with the regulatory objectives. A reserve statutory power to introduce a single regulator has also been introduced, should the other measures fail to increase confidence in the insolvency regime.