Ever heard of the Small Business, Enterprise and Employment Act? The chances are that unless you’re properly clued up and attuned to the finer points of business law, the chances are that you haven’t. Well, as accountants we think it’s useful if you are made aware of the changes this Act will introduce as they will have consequences for your small business, both now, and in the future.
So what is the Small Business, Enterprise and Employment Act? Well, it’s legislation which is designed to help entrepreneurs establish and build new or existing businesses. According to the Government, the Act will go some way to rectifying the problems faced by UK Start-Ups and will help existing businesses overcome some of the barriers that have hampered growth in recent years.
The initial phase of the Act was introduced in May 2015 and dealt with the issue of bearer shares. As part of the act share warrants to bearer, better known as bearer shares, were abolished. Any existing share warrants are now required to be surrendered within a nine month period starting from May.
The next changes proposed by the act, which are aimed at reducing the levels of red tape for small business owners and increasing overall transparency, are due to come into force from Saturday, 10th October. So what changes are proposed? Well, there are three ‘headline’ changes: changes to dates of birth, accelerated company strike-offs and changes to ‘consent to act’ letters. Are the changes likely to have a major impact on small businesses? Probably not, as most members of the small business community are likely to see these as minor procedural changes, rather than drastic changes. Never the less, they are still important and need to be noted.
Date of Birth
From the 10th October 2015, Companies House will no longer list the full date of birth of any company directors. Why make such a change? Well, because the government wants to minimise the increasing risk of personal fraud and identity theft. So what will change? Well, at present, directors are required to list their full names, residential address, any other companies they’ve been involved with and their dates of birth on the Companies House web portal. From October 10th, directors will no longer have to list the latter. However, it’s important to note that anyone forming a new company will still be required to supply their full date of birth to Companies House.
Accelerated company strike-offs
As things stand limited companies that need to be shut down formally must do so through the strike-off procedure. However, this strike-off procedure can only be used if the business hasn’t traded for the last three months and has no outstanding debts. Applications that meet these criteria are made and published in The Gazette, in order to give anyone who believes they are owed money by the company the opportunity to object. If no such objections are received, the company being struck off it is closed down after three months. Under the next phase of the Small Business, Enterprise and Employment Act will period of notice will reduce to just two months to accelerate the shut-down process.
Digital ‘consent to act’ letters
Currently all limited companies must retain paper documentation at their registered office address, known as statutory registers. However, this next phase of the Small Business, Enterprise and Employment Act will gradually phase out the need for paper documentation on-site, replacing them with digital versions. Under the existing rules directors and secretaries must sign a form to say that they have chosen to take up their role within the company and accept their legal responsibilities when a company is formed the. This procedure is known as a ‘consent to act’. If something then goes wrong and they are sued or prosecuted it is often only the company directors that will be summoned to court.
Under the next phase of the Act a digital sign off will be required which will automatically add a statement to company incorporation and officer appointment forms to confirm that new company directors and secretaries have consented to take on their legal responsibilities.
Directors and secretaries will, therefore, no longer have to sign anything, as it will be implied that they have agreed. Companies House will still write to new directors and secretaries to make them
aware of their appointment and their statutory duties.
If you are unclear about the latest changes proposed by the Small Business, Enterprise and Employment Act, or would like further clarification about how these changes might impact on your small business, then speak to Steven Glicher accountants.
Call us on 0161 485 8007 or email firstname.lastname@example.org