An overview of the Small Business, Enterprise and Employment Act 2015 for FA affiliated clubs structured as limited companies
The Small Business, Enterprise and Employment Act 2015 (the 2015 Act) has brought about a number of changes to the regulation of companies and is to be implemented in stages from 26 May 2015. The 2015 Act is intended to improve corporate transparency whilst also simplifying some of the regulatory burdens placed upon companies.
These changes will affect FA affiliated clubs structured as limited companies. Many of the most relevant changes are not taking effect until later in 2015 and early 2016. However, we recommend that companies familiarise themselves with the new requirements in good time.
The key changes that will affect FA affiliated clubs structured as limited companies are as follows:
- Companies will have to maintain a register of persons who exercise “significant control” over the company, including by way of beneficial ownership;
- Companies will no longer be able to appoint corporate directors; and
- Annual returns will no longer have to be filed at Companies House and the filing requirements for newly appointed directors have been simplified.
Persons with significant control
One of the main policy objectives of the 2015 Act is to improve transparency as to the control of companies. The 2015 Act will therefore:
- Require companies to keep a public register of persons with significant control over them, known as a PSC register;
- Impose duties on companies to gather and supply information in order for a public register to be kept;
- Give private companies the option of using an alternative method of record keeping; and
- Exclude certain information from that available to the public.
A person with “significant control” is defined as an individual that (either alone or as one of a number of joint holders of a voting right) meets one or more of the following conditions:
- the individual, directly or indirectly, holds more than 25% of the voting rights in the company;
- the individual has the right, directly or indirectly, to appoint or remove a majority of the company’s board of directors;
- the individual has the right to exercise significant influence or control over the company; and
- the trustees of a trust have the same level of control as above over a trust which itself exercises significant influence or control over the company.
It is expected that the requirement to collect information for the PSC Register will come into force in January 2016.
Prohibition on corporate directors
There is a general requirement that all company directors must be natural persons, i.e. individuals. The appointment of corporate directors, for example companies, is therefore prohibited unless exceptions are made by the Secretary of State according to legal regulations.
This prohibition was proposed to come into force in October 2015, but is now expected to be delayed until April 2016. Once the prohibition is enforced, there will be a 12 month transition period, after which any remaining corporate directors will automatically cease to remain directors.
The 2015 Act, as a response to the Government’s Red Tape Challenge, aims to simplify filing requirements and remove administrative duplication, whilst ensuring that public records remain correct. The key changes are set out below:
- From April 2016, there will be no requirement to file an Annual Return. A yearly confirmation statement will take its place to confirm that all requisite information has been previously provided for that period, or is provided with the confirmation statement. This removes the need for resubmission of information.
- Companies will be able to hold certain information otherwise required for their statutory books on the register of companies only. This will also apply to the PSC Register and is due to come into force in April 2016.
- It will no longer be necessary for an individual to sign a form AP01, but companies must now give notice to the registrar that an individual has become a director. The registrar then writes to the individual to provide notification of their registration.
Although the 2015 Act is yet to be implemented, it is important that FA affiliated clubs structured as limited companies familiarise themselves with these reforms in advance.
It is particularly important to consider who may be deemed a PSC and whether there are any corporate directors who may be removed from their position. It is anticipated that Government guidance may be produced to bring further support.
When are the relevant parts of the Act coming into force?
- October 2015 – Introduces measures relating to registered office and director disputes, excluding the day of directors’ dates of birth from the public register and reducing the time periods applicable to the company strike off procedure.
- January 2016 – Imposes requirement for companies to keep a PSC register of persons with significant control. However, the obligation to file this information at Companies House will not take effect until 3 months later.
- April 2016 – Implements the:
- changes to the statement of capital;
- new confirmation statement (replacing the annual return);
- obligation to file information from the PSC register at Companies House;
- option for private companies to keep information in their registers on the public register at Companies House;
- prohibition on corporate directors.