The rapid pace of change in the modernisation process of UK company law renders it dynamic, influential and respected internationally, owing to its ability to adapt to the constant needs of a modern society.
Significant developments have resulted in radical statutory reforms concerning transparency, accountability, prevention of abuse and deregulation of UK company law to further modernise it, and reduce administrative burdens and bureaucracy on companies by avoiding unnecessary duplication of effort in the filing requirements at Companies House, and streamlining company registration.
The recent sweeping changes impact on many aspects of company law, insolvency and directors’ disqualification with transitional phases for their implementation to allow companies time to adjust and comply in a timely manner.
You need to take on board the extent of the changes and be prepared to identify measures for their implementation. Some of the changes that are identified impose penalties on companies and their officers for non-compliance.
Areas to be aware of include:
The main corporate features are:
- Auditors ceasing to hold office – aspects concerning their removal, resignation as auditors; notification requirements, and amendments to Part 16 of the Companies Act 2006 concerning auditors.
- Amendments to the Company Directors Disqualification Act 1986 on the application for the making of a disqualification order and new grounds for disqualification.
- Changes to the requirements of company law concerning proxies.
The measures that affect companies aim to:
- Reduce red tape whilst increasing the quality of information on the public register.
- Enhance transparency and ensure the UK is seen as a trusted and fair place to do business.
All companies will be affected by at least some changes, as the measures will change legal requirements on companies, including what they file with Companies House - which will impact companies’ systems and processes. See too: The Companies and Limited Liability Partnerships (Filing Requirements) Regulations 2015, S.I. 2015, No: 1695.
It is currently expected that changes will be implemented in three stages - those with the highest impact being delivered in the final stage. Changes to the implementation schedule may still happen during and following the passage of associated secondary legislation through Parliament.
Implications for companies include:
- Streamlining company registration by making it easier to file documents at Companies House; avoiding the need to duplicate information to be provided to Companies House, Her Majesty's Revenue & Customs and other organisations.
- Definition of ‘small’ and ‘micro’ businesses in line with EU requirements and usage for the purposes of exemptions from certain requirements under the Companies Act 2006.
- Ensuring company transparency – the most significant change is the establishment of a register of people with significant control. Detailed requirements are set out on how the register will function in practice with draft regulations formulated in the form of 'Register of People with Significant Control Regulations 2015'.
- Abolition of share warrants to bearer.
- Changes in the requirement for all company directors to be natural persons (with certain exceptions for the retention of corporate directors).
- Amendments to the concept of a 'shadow director' for the purposes of the Companies Act 2006, the Insolvency Act 1986 and the Company Directors Disqualification Act 1986.
- Substantial changes to company filing requirements to take account of the following:
- Annual return reform with a duty to deliver a confirmation statement instead of an annual return.
- Additional information on the register – the option for companies to keep certain information on the central register rather than in the company’s register.
- Information and protection from abuse about a person’s date of birth as registered at Companies House.
- Contents of statements of capital obviating the need for companies to specify the amount paid or unpaid on each shares with the only requirement to state the total amount unpaid on all shares.
- Director disputes – a requirement for filing at Companies House that the director or secretary has consented to act in the relevant capacity; and the Registrar’s duty to inform new directors of their entry in the register.
- Accelerated striking off – a reduction in the notice periods for striking off companies.
- Directors disqualification – there are new grounds set out for disqualification; clearer principles for determining 'unfitness'; and compensation awards.
A draft of the Legislative Reform (Limited Partnerships) Order 2015 is currently before Parliament ("2015 Order"). The 2015 Order amends the Limited Partnerships Act 1907 ("LPA 1907") and sets out the mechanism for regulation of the private fund limited partnership ("PFLP") will operate under the regime of the LPA 1907. This Order enables a limited partnership which is a private investment fund to be designated as a PFLP on registration, and amends some of the provisions of the LPA 1907 as they apply to PFLPs and to partners in PFLPs.
In Jetivia SA v Bilta (UK) Ltd , the Supreme Court considered, inter alia, the doctrine of attribution and its applicability to companies and directors in identifying liability. This case is considered in detail in Company Law Handbook 2016.
The Concept of 'Establishment' under EU Regulation 1346/2000 for Winding Up Proceedings
In Trustees of the Olympic Airlines S.A. Pension and Life Assurance Scheme v Olympic Airlines SA  UKSA 27, the Supreme Court considered the concept of 'establishment' under EU Regulations for winding up proceedings. This case is considered in detail in Company Law Handbook 2016.
De Facto Directors
The Court of Appeal’s decision in Smithton v Naggar  is an important contribution to the identification of a de facto director in law and practice, building upon the principles established in Re Paycheck Services 3 Ltd; Revenue and Customs Commissioners v Holland .
The liability of the Registrar of Companies House
In Sebry v Companies House The Registrar of Companies , the court was required to consider whether a claim against the Registrar for negligence and breach of statutory duty could succeed, taking account of the common law principles of duty of care at common law. This case is considered in detail in Company Law Handbook 2016.
Reduction of Share Capital
There are changes to reduction of share capital provisions under the CA 2006: see The Companies Act 2006 (Amendment of Part 17) Regulations 2015, S.I. 2015, No: 472.
Financing Purchase of Own Shares
There are changes to a private company financing the purchase of its own shares: see The Companies Act 2006 (Amendment of Part 18) Regulations 2015, S.I. 2015, No: 532.
The Companies, Partnerships and Groups (Accounts and Reports) Regulations 2015, SI 2015, No: 980 makes important changes to the accounts rules.
Saleem Sheikh is author of Company Law Handbook 2016.
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