The Small Business, Enterprise and Employment Act 2015 (the Act) received Royal Assent on 26 March 2015. Whilst the implementation of Parts 7 and 8 of the Act (being those parts of the Act that deal with the corporate aspects and changes to the Companies Act 2006) is to be phased in over the next 15 months there are a number of changes coming into force in October 2015 that companies need to be aware of.
In this fourth in our series of SBEEA Alerts on the corporate aspects (which broadly follow the order of their implementation) we look at the changes relating to the suppression of a director's 'day' of birth details; director and secretary consents to act; and the accelerated company strike off procedure.
Date of Birth suppression for directors
Whilst companies will still be required to provide Companies House with the full date of birth (DOB) details for their directors, for new director appointments the 'day' of such DOB (i.e. the day of the month in the year of a director's birth) will not appear on the public register in relation to director appointments registered on or after 10 October 2015. In future, a company search of directors registered on or after 10 October 2015 will reveal only the month and year of a director's birth. The reason for suppressing a director's 'day' of birth is to make it more difficult for criminals to use this information to assist in identity theft and misuse personal data.
What about "historic" details?
As there is to be no retrospective suppression of a director's 'day' of birth; those searching for details of existing directors will, for the time being, still be able to obtain full DOB details. This will be the case where the full DOB was contained in any documents filed at Companies House before 10 October 2015. Companies House has no current intention to implement a process along the lines of that which exists in relation to directors' residential address information, which would allow a director to apply for the deletion of the 'day' of birth on documentation that has already been filed.
How will the change be made?
Section 96 of the Act amends section 1087 CA06 and inserts new sections 1087A and 1087B.
In future, will a director's day of birth be possible to find?
The full DOB (i.e. including the 'day') will, however, be available for inspection in the following instances:
- on the company's own register of directors – note this differs from the regime which exists in relation to a director's usual residential address; and
- where a company elects to hold the company's register of directors on the central register at Companies House (provisions for which are due to come into force in June 2016) where a director's full date of birth must appear.
Can the Registrar disclose this information? If so, when and to whom?
The Registrar must not disclose the 'day' of birth information to third parties, save in limited circumstances. These exceptions are set out in section 1087B CA06 and allow disclosure of full DOB information to certain public authorities and credit reference agencies. These are the same authorities that are able to receive information about directors' residential addresses and include the Serious Fraud Office, various Security Services, the Bank of England, the Financial Conduct Authority and the Panel on Takeovers and Mergers.
Further, the current ability for a director to apply, under section 243 CA06, for an exemption whereby the Registrar will not provide a director's residential address to a specific credit reference agency that may request it, is to be extended to directors' 'day' of birth information.
How are these changes being made?
The Companies (Disclosure of Date of Birth Information) Regulations 2015 (Regulations) specify the conditions for disclosure of DOB information to public authorities and credit reference agencies. These also come into force on 10 October 2015. To access a copy of the Regulations click here.
The extension of the provisions of s243 CA06 to DOB information is being effected by new section 1087B (3) CA06.
Director and secretary disputes: filing and registration requirements - consent to act
One of the aims of the Act is to reduce the number of director disputes e.g. where someone may find they have been appointed as a director without their knowledge or consent. This is the driver for two of the changes coming into force on 10 October 2015 and a further change now due to be implemented in April 2016 (delayed from December 2015).
1. Appointing directors and secretaries
When a new director or secretary is appointed, companies currently have 14 days to notify Companies House of any such appointment. In each case, this must be accompanied by a 'consent to act' from the appointee. For paper filings, this is currently satisfied by the appointed officer signing the relevant Companies House form e.g. AP01, AP02, AP03, AP04 or IN01. For electronic/web filings the company would provide three out of seven pieces of requested personal information about the appointee (e.g. eye colour, parent's maiden name etc) to act as personal authentication of the electronic filing.
From 10 October 2015, a company (or in the case of the formation of a new company, the subscribers) will instead need to deliver a statement that a relevant officer appointee has consented to act in the relevant capacity, as opposed to providing express evidence of their having consented to act. This will be achieved by ticking a box on the relevant Companies House form to confirm that such consent has been obtained. Note that relevant Companies House forms will still need to be signed by an officer of the company and, in so doing, act as the authorising signatory evidencing the appointment.
This means that when a company submits the relevant Companies House form, for paper filing it will no longer need to be signed by the director or secretary being appointed, and for electronic/web filing there will be no need to provide the personal authentication information in respect of officer appointments.
Notwithstanding the new regime, we would recommend that companies continue to obtain evidence of consent from each officer the appointment of whom is to be registered after 10 October 2015. The proposed changes relating to director disputes (now due to come into force in April 2016) will make it easier for a director to bring an action seeking to have his/her details removed from the public register where he/she was falsely appointed. In these circumstances, companies will be required to provide evidence of each director's consent to act, thus obtaining express consent at the time of appointment will be helpful.
Where an officer is being appointed as a sole director, consent will still be required to be obtained by the company and the appointee will still be required to authorise the fact of appointment on the registration form. Thus, personal authentication information will still be required in such circumstances when electronic/web filing is used.
Revised Companies House forms are expected to be available on 10 October 2015.
How is this change being made?
Section 100 of the Act amends various provisions of the CA06 (namely sections 12, 95, 167 and 276). The changes apply in relation to appointments made on and following a company's incorporation.
2. Making directors aware of their obligations
A second aim of the Government in undertaking this area of reform is to increase directors' awareness of their duties. From 10 October 2015, the Registrar will be obliged to write to all newly appointed directors, as soon as reasonably practicable after the registration of their appointment, to advise them they have been entered onto the public register at Companies House. Such notice will also contain or direct them to information about the role and statutory duties of a director.
How will this change be made?
Section 101 of the Act brings these changes into force by adding a new section 1079B to the CA06.
Further changes in the pipeline
Further changes to help reduce the number of director disputes are expected to come into force in April 2016. These include introducing a simpler and faster way to get falsely appointed directors' details removed from the register which will apply where a company cannot provide evidence to satisfy the Registrar that a director has so consented. We will cover this change in more detail in a later Alert.
For those companies that use electronic filing, currently the information which is supplied to Companies House when appointing a director or secretary is deemed to equate to consent to act and an electronic signature. One of the flaws in the system is that information provided could be false with no ability for Companies House to know or check its accuracy. Thus, the proposed change, coupled with the requirement to write to all new directors regarding their appointment, will provide Companies House with an easier route to remove falsely appointed director details from the public record.
Quicker company strike-offs
Under s1000 of the CA06, the Registrar currently may only strike off a company if he has reasonable cause to believe it is not carrying on business or is not in operation. The Registrar must give notice of this intention and advertise the notice of proposed strike off in the Law Society Gazette. This process can take up to six months and gives creditors the opportunity to object.
The changes coming into force on 10 October (and applying only to procedures initiated after this date) will shorten various statutory time periods, thereby reducing the overall period that it takes for a company to be struck off the public register, from six months to four months.
How will the changes be made?
Section 103 of the Act amends section 1000 of the CA 2006. The time periods in the process to be shortened include:
- reducing the time the Registrar must wait to send communications to the company from one month to 14 days;
- enabling the Registrar to strike off a company two months after publication of the Gazette notice rather than the current three months.
What are the implications for companies and creditors?
Whilst this reduction in the overall time period should still give creditors sufficient time to object to a striking off, companies should be mindful that the changes will give them less time to respond to any Companies House initiated striking off procedures in the circumstances of, for example, CA06 filing defaults.
Further corresponding changes
Time periods are also being accelerated for striking off a company under s1001 of the CA06 (duty to act in case of company being wound up) and s1003 (striking off on application by a company) under which the Registrar must publish a notice in the Gazette. Again, the current three month period is to be reduced to two months.
Application of the above changes to other entities
The Companies and Limited Liability Partnerships (Filing Requirements) Regulations 2015 come into force on 10 October 2015, and will apply the above changes, as appropriate, to other entities including limited liability partnerships, Societas Europaea, European Economic Interest Groupings and unregistered companies. To access a copy of the Regulations click here.