Are you in control?
Are you a person with 'significant control'? From 2016, most companies will need to keep a register of the people that control it and ultimately put the identity of its controllers in the public domain.
The policy behind the change is to try to stop people in control of companies being able to hide behind a 'corporate veil' and to show exactly who is running a company. But who has control over your company?
Under the Small Business, Enterprise and Employment Act 2015 which brings these changes into effect, someone is said to be a person with significant control if one of five criteria is met. Three of those conditions focus on those with 25% or more in the company's shares, voting rights and/or the ability to control the appointment of a majority to the board of directors.
The fourth condition refers to someone who has the ability to exercise significant control and influence over the company. Detailed guidance on what this means in practice is awaited but it could include many of those involved in the running of companies even if they are not in fact directors or shareholders.
The fifth condition ensures no one can 'hide' behind trust arrangements - companies will be required to disclose the identity of those who exercise control through trustees of a trust.
The same legislation will also bring into effect a number of other significant changes including:-
- the replacement of the annual return with a 'confirmation statement';
- an accelerated strike-off procedure will become available; and
- dates of birth of newly appointed directors will be partially hidden from public view to help reduce fraud.
In addition, these will be an end to companies being appointed as directors of other companies and replacement directors will need to be found. There will be scope for exceptions to this rule but these will only be available in limited circumstances.
If you would like advice on how to prepare your company for those changes, please contact Tim Stevenson (tim.stevenson@mcp-law.co.uk 01842 756101) or Aimee Hedley (aimee.hedley@mcp-law.co.uk 01842 756139).