Significant changes to UK company law โ€“ how to get prepared

Published: 08/02/2016

The Small Business, Enterprise and Employment Act 2015 (the Act) which passed into law on 26 March 2015 makes some material changes to UK company law which will impact on companies of all sizes. These changes fall into two distinct camps: (i) measures aimed at increasing transparency around who controls UK companies and (ii) measures to reduce red tape, particularly in relation to the filing requirements for UK companies. This note gives a snapshot of the key changes, when they will take effect and what, if any, preparation steps companies should be taking now.

Key change

Implementation date

Abolition of bearer shares

26 May 2015

New PSC register (persons with significant control)

6 April 2016

New confirmation statement to replace annual returns

30 June 2016 (anticipated)

New option to keep certain statutory register information at Companies House

June 2016 (anticipated)

Abolition of corporate directors

October 2016 (anticipated)



Transparency measures

Abolition of corporate directors
The Act will require, subject to certain exceptions, that all directors are to be natural persons. Companies will be given a one year ‘grace period’ from implementation of the measure to change any directorships which conflict with the new rule. After this time, any remaining corporate directors will automatically cease to be directors. There has been consultation to identify certain exceptions to this corporate directorship ban; further detail is expected in April 2016. In the meantime it’s worth companies reviewing now any corporate directors sitting on their boards should they need to be replaced in due course. 

PSC Register 
This is perhaps the most controversial change for companies under the Act. The Act requires all UK companies (UK listed companies are broadly exempt) to maintain a register of persons with significant control over the company (known as the ‘PSC Register’). Broadly, this register is to include details of individuals who own or control 25% or more of a company’s shares or voting rights, have control over the appointment or removal of a majority of the company’s board or have the right to exercise ‘significant influence or control’ over the company. The measure also applies to UK LLPs with an adjusted control criteria to fit with LLP structures.

The Act places obligations not only on the company or LLP itself in terms of the set-up, accuracy and ongoing upkeep of the PSC register but also on shareholders and others to provide relevant information for inclusion on the PSC register. There are significant sanctions set out in the Act for failure to comply. Undoubtedly this measure will be a further administrative burden for companies and LLPs.

As companies and LLPs must have their PSC register in place by 6 April 2016, they should now be taking steps to identify if they might have any persons of significant control. The aim is to obtain the relevant information to go on the company’s or LLP’s PSC register by 6 April. If for any reason the relevant information has not been obtained by 6 April, the company or LLP will need to ensure that it has the appropriate official wording recording this fact in its PSC register.

For further information on the PSC register link to a more detailed article

Abolition of bearer shares
Bearer shares are unlikely to be a feature of most companies; they are shares which have been issued but where no one is registered as the holder of those shares in the company’s share register. Bearer shares are now abolished and, as of 26 May 2015, no new bearer shares can be issued. There is a 9 month voluntary surrender period from 26 May 2015 during which bearer shares are to be converted into registered shares; ultimately a company will be required to apply to court for cancellation of any outstanding bearer shares. Companies should be checking their records now to ascertain whether they have indeed issued any bearer shares. There is a prescribed procedure for the notification of bearer holders. A company must act immediately if they do not already have this in hand.

Reduction of red tape measures

Abolition of annual returns
The annual return (a snapshot of the details of a company’s shareholders, officers and share capital) is to be abolished and replaced by a confirmation statement. The confirmation statement, like the annual return, will need to be submitted every 12 months but should be simpler to complete as it is on a ‘check and confirm’ basis. There is nothing that companies need to do to prepare for this at this time.

New option to keep certain statutory information at Companies House

Private companies will, with shareholder approval, be able to opt not to keep certain statutory registers as part of their company books but instead provide the information to Companies House to be maintained on a central register. The relevant registers are the members, directors, directors’ residential addresses, secretaries and PSC registers. It’s unclear to what extent companies will take up this option since other registers must still be maintained by the company. Some companies may be also concerned about the time delay in updating the register of members; as a matter of company law a person is not recognised as the legal holder of a share until their name is entered into the register of members. There is nothing that private companies need to do to prepare for this change at this time other than to consider whether this is an option they would wish to pursue.

If you require any further information in relation to the matters mentioned in this article please contact Andrea Curtis on 01473 406349 or andrea-curtis@birketts.co.uk.

People Finder