Companies. New Law, New Crimes!
There is a new act of Parliament coming soon – [Click here] The Small Business, Enterprise and Employment Act 2015
The Act is already law in the sense that it has received Royal Assent in March 2015, but October 2015 is the stated date for many of its provisions. As so often these days, the new law will actually be brought into force a little bit at a time
There seem to be two provisions which will be the biggest changes to the present regime
First, it will be illegal – a new criminal offence [as if the world needs more of them], to register as a Director of a company, another Company. Also the appointment will be void. So, No more “Corporate Directors”. [At present the rule is that at least one Director of a Company has to be a human being, but the others or some of them can be Companies],
As usual, this new rule will not be easy to understand or implement or adhere to. Because the Government doesn’t mean it. In fact, there will be exceptions to the new rule. Guess what. No-one knows what the exceptions will be! They will be announced probably after the new Law is in place.
What have we learned?:
- If you already have a Corporate Director in your Company – watch closely for news of the permitted exceptions
- If you already have a Corporate Director, then this appointment will lapse one year after the Law takes effect, unless an exception is granted
- The likelihood is that exceptions will be decided case by case
- Even if an exception is granted, the existing law that there must be at least one Human Director will still apply
- The New Law will not apply to LLPs
Moving smartly on, the new Law also makes provision for the creation of a public register of “Persons With Significant Control” of a Company. Whilst there are examples of who is such a person – one is, a person holding 25% or more of the shares, – there is no attempt before the Act comes into force to define an exhaustive list. That will be left to “secondary legislation” but the Act does make it a criminal offence [really there just aren’t enough of those] both to provide false information and to withhold true registerable information. Both the Company and the “Person” can be prosecuted.
So the new Law is clear:-
- Corporate Directorships are illegal unless they are not, to be decided by criteria which are as yet unknown.
- Persons With Significant Control of Companies are a largely undefined group of people who exercise “significant influence or control over the Company.” The meaning of the phrase is not defined, yet they can be prosecuted if their details are not added to the new statutory register.
- As the Companies House commentary has it, the New Law will “reduce Red Tape”.
My own view is that the introduction of a raft of new criminal offences, complete with provision for exceptions and defences which are not yet written and probably will have to be decided case by case, will gladden the hearts of bureaucrats, lawyers and, in particular, red tape manufacturers throughout the land
Here I am in Leeds, do get in touch whenever I can assist and in particular whenever you have a legal issue which has any foreign element firstname.lastname@example.org or phone me or Louise +44 (0) 1138160116