New rules on company directors’ appointments

Posted by Nigel Kotani in Excello Law Blogs on Thursday, August 11th, 2016

The Small Business Enterprise and Employment Act of 2015 introduced a number of changes that will have an effect on company directors and on company secretarial issues. In particular, processes and forms which have long been familiar to shareholders and directors will be changing.

With effect from October 2016 – the exact date has yet to be announced – all new directors appointed to companies will have to be natural persons, and not corporate entities. A ban on companies having no natural persons as directors has been in place for some time. Companies will have 12 months to remove existing corporate entities which are directors, but it is still possible that the new regulations will permit exemptions.

The paperwork for appointments of directors has also changed. Incoming directors used to be required to sign a consent to act form, which would be filed at Companies House. Since 10 October 2015, the relevant form has been signed solely by an existing director, and not by the incoming one, with the existing director confirming that the incoming director had consented to act. It would be prudent for companies to therefore have incoming directors sign a separate consent to act before submitting the new confirmation forms.

Once the form has been filed, Companies House will write to the incoming director notifying them that they have been appointed as a director, and providing them with information concerning their duties. A simple mechanism was introduced in April 2016 allowing for the removal as a director of anyone notified to Companies House as having consented to be appointed when they did not, in fact, do so.

Finally, with effect from 30 June 2016, the requirement of companies to submit an Annual Return has been abolished.  It’s has been replaced by a requirement to file with Companies House at least every 12 months a statement that every filing that the company was legally required to make (see below) in the previous period was correctly made. It remains to be seen whether this requirement will make it easier to get a snapshot of a company from its record at Companies House, or more difficult.

The filing duties which the confirmation statement must cover include:

  • Changes of registered office
  • Changes in directors
  • Changes in company secretaries
  • Changes in persons with significant control
  • Decision to stop keeping registers on the central register
  • Details of any alternative inspection location
  • Changes in the principal business activities
  • Changes in the statement of share capital
This article was written by Nigel Kotani
Nigel Kotani

Nigel is a flexible business lawyer who has advised on contracts from as small as trading terms for sole traders to as large as the sale of a factory for US$250M. He also advises on management buy-outs, group restructurings, private equity investment, private and public equity fundraising and joint ventures. You can email Nigel at [email protected]

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