The 30th June 2016 is a significant date for UK company legislation and you will likely have heard chatter regarding the new Register of People with Significant Control (PSC).
The PSC register is not the only item being implemented on this date, however, so we thought it would be useful to run through some of the other changes that will affect the company formation process.
Principal Business Activities – SIC Codes
The Standard Industrial Classification (SIC) codes are not new – they have been in use since 1948 – but up to now a company has only had to report them to Companies House on their Annual Return. From 30th June each new company will have to report their principal business activities, in the form of up to four SIC codes, on formation.
This gets this piece of information on to the public register one year before it would do under the current regime. We cannot see any huge implications for this change, though we think it could be used for marketing purposes, allowing buinesses to target companies in industries relevant to the products and services they offer, much earlier in the company’s life.
This change is a result of s.93 of the Small Business, Enterprise and Employment (SBEE) Act 2015.
Statement of Capital
The Statement of Capital was new with the Companies Act 2006 and was intended to make it easier for lenders, investors, creditors, etc. to see the share structure of a company. For smaller companies this appears to have been perfectly adequate, but for larger companies with complicated share structures the Statement of Capital has proven to be a massive headache.
One of the reasons for this was the requirement for a company to show the amount paid and unpaid on each class of their issued shares. If the shares had been issued over time, in a series of allotments, with different sale prices and different proportions paid-up, trying to work out what to put on the Statement of Capital could leave your head spinning.
On 30th June a simplification to the Statement of Capital is being introduced so that you no longer have to file details of the amount paid and unpaid for each class, instead you just need to provide the total amount unpaid for each currency in issue.
This figure should be more useful for lenders, investors, creditors, etc. but, more importantly, it will make the preparation of the Statement of Capital much more straightforward.
The Option to Keep Your Statutory Registers on the Public Registry
A company is required to keep ‘Statutory Registers’ of certain information. This includes the registers of Directors, Secretaries, Members and Directors’ Residential Addresses, as well as the new PSC Register. At the moment these registers can be kept at the company’s registered office address, or at a Single Alternative Inspection Location (SAIL).
From 30th June a company may opt to keep the above registers on the public registry at Companies House, either on or after incorporation. The idea is to help reduce the administrative burden for small companies and make it easier for them to comply with their statutory duties.
While this option probably will make things easier, we have serious concerns over the security and control of officers’ personal information.
At the moment a company must make its registers available for inspection but any person wanting to inspect the registers is required to give five working days’ notice, including their personal details and their reason for requiring the information. If the company suspects that the information is not required for a ‘proper purpose’ then they may apply to the court to prevent the inspection. This gives the company an element of control over who can view the sensitive information, and allows them to keep records on who has inspected the registers.
Identity theft is a growing problem with Cifas reporting an increase of 27% in the first quarter of 2015 compared to the same period in 2014. As Companies House is a public registry, a large portion of the information you file with them enters the public domain, which makes it easier for identity thieves to access it.
The Companies Act 2006 introduced the concept of a ‘Service Address’, to protect an individual’s home address, and the 15th October 2015 implementation of the SBEE Act introduced the masking of a person’s date of birth, so only the month and year are made public.
However, if a company opts to keep its registers on the public register, then the information contained therein becomes part of the public record and can be inspected by anyone over the internet. This means that the company does not have sight of, and cannot control, who is viewing sensitive information, placing it at risk of misuse.
We would not advise placing your personal information on the public register.
All of the above will affect the company formation process and changes will be implemented on the paper forms and in all online applications. If you are interested in viewing the paper incorporation forms that will be introduced on 30th June 2006 then we have previews of the draft IN01 and, for LLPs, the draft LLIN01.