We have discussed the aims of the Bill and the Registrar’s new powers here, looked at the new identity verification process here and analysed the impact on company incorporations here. In this article, we will look at the proposed reform for company directors and shareholders, and what impact this may bring.
New rules for directors
In addition to identity verification, key things to note for directors include:
- A person subject to UK sanctions cannot act as a director of a company, or form or manage one. These sanctions include:
- Trade sanctions
- Financial sanctions, including frozen assets
- Immigration sanctions, known as travel bans
- Aircraft and shipping sanctions
- A person cannot act as a director of a company unless the company has notified the Registrar of the director’s appointment.
- If a director is disqualified under the Company Directors Disqualification Act 1986, the director will automatically cease to hold office on disqualification.
- In addition, corporate directors of UK companies will no longer be allowed to act as a director unless they satisfy an exemption, which will require the corporate director to:
- Be an existing incorporated company in the UK and have only natural persons acting as directors; or
- Have at least one natural person acting as a director in the company alongside the corporate director.
New rules for persons with significant control (PSCs)
PSCs must also go through an identity verification process, like directors. In addition to the requirement for identity verification mentioned above, the Registrar will make available:
- More information from companies claiming an exemption from the requirement to provide details of their PSCs, including the reason for the exemption; and
- The conditions satisfied which allow a relevant legal entity (RLE) to be recorded as a PSC.
The Bill will propose that companies no longer need to keep their own register of directors, directors’ residential addresses, register of secretaries or a PSC register, however they are still required to notify Companies House of any related changes.
Shareholders and the annual confirmation statement
Private companies will no longer be able to keep its register regarding their shareholders on the Companies House register – they will now have to maintain this themselves. As a one-off, the register must include full names and addresses of individuals in the next annual confirmation statement, after the Bill is passed.
Preventing the abuse of personal information
The Bill includes the ability for individuals, whose details appear publicly on the Companies House register, to apply to have their personal information suppressed from public disclosure.
Individuals can apply to suppress:
- Residential address in most instances where it appears on the register (for example, when used as a registered office address)
- Business occupation
- The day of date of birth for documents filed prior to 10 October 2015
- Name (current or previous)
- Sensitive addresses, with evidence that the residents are at serious risk of violence or intimidation
What these changes mean
In summary, these changes are welcome and will bring a positive impact in ensuring the prevention of personal data abuse, and that directors are appropriately appointed. It is also useful for individuals who will have greater ability to suppress their personal information to help with data protection breaches. However, it does seem that it will bring on additional burdens where companies can no longer hold their statutory registers with Companies House -they may have to either ensure that individuals within the company have the capabilities of ensuring such registers are updated appropriately and as per the Companies Act 2006, or seek assistance elsewhere, such as from an Authorised Corporate Service Provider (“ACSP”), which can be an additional financial burden to the company.
You can read our full analysis of all major parts of the Bill and the Companies House reform below:
We will continue to follow the Bill’s progress as it makes its way through Parliament. If you require further information, please get in touch with Katie Holden, Senior Manager, or a member of the Company Secretarial team.