The Small Business, Enterprise and Employment Act 2015 (“the SBEE”) received Royal Assent on 26 March 2015 and introduces a wide variety of provisions with the general aim of reducing barriers which prevent small businesses from growing and competing (please see our July 2014 Commercial Notepad). We summarise below some of the key corporate and commercial provisions which are to be implemented either immediately or two months from the date of enactment.
26 March 2015
As of 26 March 2015, the SBEE brought into effect provisions relating to the postponement of employment tribunal hearings, regulations on procurement and regulations concerning financial information of small and medium sized businesses. In respect of the latter, these provisions principally permit the Treasury to make regulations that will require banks to, upon request by an SME:
- share relevant SME credit data with designated credit reference agencies and finance lenders; and
- pass on SME details to certain finance platforms in the event of an unsuccessful application for a loan or other credit facility by an SME.
It is anticipated this sharing of data in the lending market will increase competition and therefore grant SMEs a greater ability to apply for credit on favourable terms.
26 May 2015
Further provisions are scheduled to come into effect on 26 May 2015 and will implement a wide variety of reforms including:
- The power to invalidate certain restrictive terms of business contracts which prevent or impose a condition upon one of the parties assigning its receivables to a third party.
- The ability of regulators to impose a requirement on prescribed companies to publish certain information about both their payment practices and their performance by reference to these practices. The Department for Business, Innovation and Skills recently announced that by April 2016 large companies will be required to disclose any late payment interest owed and paid. The duty on the Secretary of State to secure a system for streamlining company registration by no later than 31 May 2017.
- payment terms;
- average time taken to pay;
- proportion of invoices paid beyond agreed terms;
- proportion of invoices paid (1) in 30 days or less, (2) between 31 to 60 days or (3) beyond 60 days; and
The prohibition on companies from issuing bearer shares (i.e. unregistered shares owned by whoever physically holds the share warrant) following which holders will be given a 9 month grace period to surrender and exchange existing bearer shares for registered shares. This prohibition is intended to increase transparency around the ownership and control of UK companies and deter potential illegal activity made possible by the unregistered nature of these shares.
The extension of existing statutory director duties to shadow directors to ensure that shadow directors have the equivalent legal duties.
There are still a number of provisions yet to be implemented. In particular, a number of corporate provisions aimed at increasing transparency as to ownership and control of UK companies are expected to be brought into force within the next 12 months, for example the prohibition on corporate directors and the requirement to maintain a “Persons with Significant Control Register” are anticipated for October 2015 and January 2016 respectively. We will continue to provide further updates as implementation occurs.