After a period of relative calm following the gradual implementation of the Companies Act 2006, notaries must contend with some changes to company law that will have a substantial effect on how they deal with company clients.
The Small Business, Enterprise and Employment Act 2015 will reduce the range of circumstances in which a notary will have to deal with corporate directors (without removing those circumstances completely) and will introduce a register of “People with Significant Control”.
The near abolition of corporate directors is on balance to be welcomed. The notary’s task is significantly more complex if a corporate director is involved and it can be very difficult to explain the role of a corporate director to a foreign authority. It seems likely that no new corporate directors will be appointed from October 2015 with a period of grace being given to companies with existing corporate directors to replace them with individual directors or remove them. The exceptions to the ban on corporate directors are not entirely clear at present. There is no proposal at the moment to change the position with regard to corporate members of LLPs.
As currently scheduled, from January 2016 companies will be required to maintain a register of People with Significant Control (a PSC register) with the requirement to file this register with Companies House coming into force in April 2016. Schedule 3 to the Small Business, Enterprise and Employment Act 2015 contains the provisions setting out what information must be contained in this register and how the register is to be maintained. These include the insertion of a new Schedule 1A to the Companies Act 2006 which lists the persons whose details must be placed on the PSC register, which in summary are:
- any person who holds, directly or indirectly, more than 25%of the shares in the company;
- any person who holds, directly or indirectly, more than 25% of the voting rights in the company;
- any person who holds the right, directly or indirectly, to appoint or remove a majority of the board of directors of the company;
- any person who has the right to exercise, or actually exercises, significant influence or control over the company;
- any person who has the right to exercise, or actually exercises, significant influence or control over the activities of the trustees of a trust or the members of a firm that, under the law by which it is governed, is not a legal person, and who meet any of the other conditions specified above in relation to the company.
This is a major initiative and it would be no surprise at all if the commencement date for the requirement to maintain this register were to be put back.
When the requirement is imposed it is likely to be a major boon to notaries. It will be one more report that can be accessed from Companies House Direct or WebCHeck and authenticated for production overseas. It will also drastically simplify the procedure for identifying the ultimate beneficial owner of a company client where that is required of the notary under anti-money-laundering legislation.
April 2016 is also the targeted commencement date for the part of the Act that will permit private companies to keep certain information on the public register only, instead of maintaining their own statutory registers. This will apply to the registers of members, directors, secretaries, directors’ residential addresses and the PSC register. Given the absence of any guarantee of the accuracy of the information maintained on the registers at Companies House, this is perhaps a less welcome development for notaries as there will no longer be the option of comparing the information filed at Companies House with a private company’s statutory registers.
All changes to company law will be included in the CPE-accredited courses dealing with company matters on this website as and when they are implemented.