Changes to the Companies Act 2006Oct 01, 2014
The evolution of laws takes place over time through the proposition of different Bills, rife with suggestions and changes that legislators feel are necessary to improve the current methods and means that govern society. The Companies Act 2006 is no different, and the Small Business, Enterprise and Employment Bill intends to improve how companies are operated in order to further trust within the business realm of the UK and reducing the amount of red tape that companies have to go through.
Duties of Shadow Directors
Throughout the years, shadow directors were given separate responsibilities, given the fact that they weren't wearing the mantle of true directors. However, they will now be subject to the same general duties that apply to directors in the extent to which they are capable of complying. This puts shadow directors in the crossfire of being sued by the company in the event that there is a breach of those duties. In this light, however, the Bill will propose a new definition of a shadow director in order to avoid some confusion of roles that may be carried out by other individuals that exercise similar functions.
A Record of Registry
According to the new Bill, every company will require to keep an open and public registry of those having significant control within the company. Such information will have to be filed at Companies House once a year and must be kept up to date, and the aim is to prevent corrupt individuals from avoiding liability by hiding behind secret companies. Such a proposal will apply to all UK companies and limited liability partnerships, and there is an ongoing debate to establish a requirement at the EU level. There is the possibility of making an application for such information to not be disclosed to the public if there is a serious risk of violence and/or intimidation.
Disqualification for Overseas Misconduct
One significant amendment relates to the disqualification of directors. Determining the unfit character of a director can take into account past deed, misconduct overseas and a breach of the general duties. The second of which is examined in detail, considering the extent to which a director was responsible for the insolvency of an overseas company.
Elimination of Corporate Directors
No longer will there be the use of a company serving as director for another company, unless the circumstances fall within very limited exceptions. Corporate directors will have one year and a day after the legislation comes into force before they are terminated, unless they have been replaced with individual directors before then.
Elimination of Bearer Shares
The owner of shares being listed in a company's register of members as a bearer of the warrant is being abolished. The reason for this is that it is very rarely used except by a handful of small companies. Before the abolishment takes place, existing warrants are given the chance to be converted into shares or cancelled, and the authority to issue warrants can be removed by companies through their Articles of Association to prevent this from happening in the future.