New rules for Companies House reporting – Part 2

06/03/2016

Important changes for directors

There are a number of measures in the Small Business Enterprise and Employment Act 2015 affecting company directors and those who influence or instruct them.

Quick facts:

Under the new Act:

• shadow directors responsibilities and liabilities will be extended
• the consent to act procedure will be replaced
• falsely appointed directors’ details will be easier to remove from the register
• new offences will be added to the directors’ disqualification regime
• corporate directors will no longer be permitted (with some limited exceptions).

Shadow directors

The Act extends the liability of shadow directors (a person in accordance with whose instructions the board of a company is accustomed to acting) so that, to the extent possible, they reflect the statutory duties applicable to appointed directors.
The intention is to make the legal duties of shadow directors clearer and more comprehensive and to increase the accountability of shadow directors.
If you are involved in management structures with appointed or nominee directors and controlling shareholders or others with significant influence over management decisions, you could be acting as a shadow director in some circumstances.
Exceptions include those acting in a purely professional capacity when providing advice, such as lawyers and accountants.

Consent to act as an officer

Companies House has added a statement to the relevant appointment and incorporation forms (paper and electronic) for newly appointed officers. Companies are required to agree to this statement to show that the ‘officer’ named has consented to act in their relevant capacity.
This replaces the previous consent to act procedure which required a signature on paper forms and personal authentication on electronic filings to be sent to Companies House.
Companies House will write to all newly appointed directors listed on the forms to make them aware that their appointment has been filed on the public register and explain their general legal duties. The company should keep a written record that the new director has consented to act so it can be produced if the new director subsequently claims they were falsely appointed.

Director disputes

From April 2016, an appointed director who didn’t consent to act in their appointment can apply to have the notification of their appointment removed from the register.
When an application is received by Companies House, the company in question will be asked to provide evidence that the director ‘consented to act’ in their appointment. If sufficient evidence isn’t provided, this will result in the director’s appointment being removed from the register.

Director’s misconduct

New offences have been added to the current directors’ disqualification regime. These are:
• ‘disqualification for certain convictions abroad’
• ‘disqualification of persons instructing unfit directors’

Corporate Directors – expected to be implemented from October 2016

A prohibition on appointing corporate directors will be introduced with some limited exceptions. Any company with an existing corporate director will need to take action, either explaining how they meet the conditions for an exception or give notice to the registrar that the corporation has ceased to be a director.

For advice on changes for directors please contact Jackie Broadfoot