Changes to Companies Act – Corporate Directors and Controllers

Regulatory Roundup 59 provided an update of the progress being made in respect of the ‘Small Business, Enterprise and Employment Bill’ (‘SBEEB’) which would include changes to the Companies Act.

As a reminder, one of the proposals in the Bill (Part 7) was for companies that fall within the requirement to keep an up-to-date register (‘PSC Register’) of people with significant control over the company (for this purpose, ‘person’ means an individual). In brief ‘significant control’ includes holding more than 25% of the shares in the company or having significant influence or control over the company – however reference should be made to Schedule 3 (Part 1) of the Bill for all the relevant conditions. Persons who hold control by virtue of only having significant control over some other legal entity that is subject to its own disclosure requirements (‘relevant legal entity’) will be deemed ‘non-registrable’ and will not be entered in the Register.

The requirement for a PSC Register will not apply to companies whose shares fall within the FCA Sourcebook DTR5 Rules (Disclosure and Transparency Rules) – essentially companies listed in the UK and financial instruments relating to those shares.

The Discussion Paper issued last October provides a useful overview of the PSC Register.

A further proposal was the prohibition of corporate directors, albeit with ‘exceptions’ – there was a consultative review on possible exceptions which closed last month. The review was of the opinion that there was not a strong case to prohibit corporate members of LLPs but the position will be reviewed in parallel with the review of SBEEB.

The Department for Business, Innovation and Skills has now published a provisional implementation plan.

The prohibition on corporate directors is scheduled to come into force in October of this year whilst the requirement to keep a PSC Register will commence in January 2016 (however there will not be a need to file this information at Companies House until April 2016).