The Small Business, Enterprise, and Employment Act of 2015 passed earlier this year presented a way to make the United Kingdom a more attractive place to start, finance, and grow small businesses. The act aims to minimize obstacles that many small businesses face in their infancy, improving and better defining access to finance, insolvency, and corporate transparency.
The act is expected to phase in over a 12 month span from March 2015 to March 2016, and while many anticipate this new legislation to primarily affect small entities, two key components extend its reach to all corporations.
One significant change is the abolition of bearer shares. Bearer shares are unregistered shares that are held by whomever physically holds the share warrant. Because of this, shares are often held anonymously; however, in accordance with the new act, bearer share holders have until February 26, 2016 to surrender their shares to the company in exchange for registered ones. This affects all levels of business regardless of size. In an effort to improve corporate transparency, companies are required to identify and register people with more than 25% of the company’s shares or voting rights to Companies House annually starting in April 2016.
The second provision affecting large and small businesses alike covers the application of directors’ duties to include shadow directors. In the past, general statutory duties that applied to directors were limited in regards to shadow directors. By definition, a shadow director is “a person in accordance with whose directions or instructions the directors of a company are accustomed to act. Under this definition, it is possible that a director, or the whole board, of a holding company, and the holding company itself, could be treated as a shadow director of a subsidiary” (Brefi Group). As of March of this year, the general duties of a director will apply to shadow directors as well.
Regardless of country of origin, sweeping changes such as these must be understood and acknowledged in order to compare local legislation with global trends. There is always something to learn!