Essential Corporate News – Week ending September 25, 2015

Welcome to Essential Corporate News, our weekly news service covering the latest developments in the UK corporate world.

On September 18, 2015 the Small Business, Enterprise and Employment Act 2015 (Commencement No 2 and Transitional Provisions) Regulations 2015 were published. These Regulations relate to the implementation of certain amendments to the Companies Act 2006 (CA 2006) and the Company Directors Disqualification Act 1986 (CDDA 1986) as made by the Small Business, Enterprise and Employment Act 2015.

On October 10, 2015, the following amendments to the CA 2006 will come into force:

• amendments to section 1087 CA 2006 which enable the Registrar of Companies to omit the day of the date of birth of company directors from the information on the register available for public inspection;
• amendments to sections 12, 95, 167 and 276 CA 2006 which remove the requirement for companies to provide the Registrar with a consent by a company director or secretary to act in that capacity, and replace it with a requirement to state that the person has consented to act;
• new section 1079B CA 2006, which obliges the Registrar to notify new company directors as soon as reasonably practicable after their appointment has been registered, and to provide them with information about directors' duties; and
• amendments to section 1000 CA 2006 which reduce the timescales under which the Registrar may strike off companies from the register.

The Regulations also bring into force, on October 1, 2015, several amendments to the CDDA 1986, including:

• the introduction of section 5A which allows the Secretary of State to apply to the court for a disqualification order on the grounds that a director has been convicted of certain offences overseas; and
• expanding the matters the court must have regard to when determining whether a person should be disqualified as a director, including enabling the court to take conduct in relation to overseas companies into account when considering a disqualification application in relation to the conduct of a director of an insolvent company and a person’s conduct in relation to more than one company.

(The Small Business, Enterprise and Employment Act 2015 (Commencement No 2) Regulations 2015, 09.15)

On September 18, 2015 the Companies (Disclosure of Date of Birth Information) Regulations 2015 were published, along with an explanatory memorandum. These Regulations relate to the amendments made to section 1087 Companies Act 2006 by the Small Business, Enterprise and Employment Act 2015, which allow the day of the date of birth of company directors to be omitted from the public register. The Regulations set out the entities which may receive this date of birth information and specify the conditions that must be met for disclosure of it to be made by the Registrar of Companies to such entities.

These Regulations come into force on October 10, 2015 and provide that:

• the public authorities that may receive date of birth information include HMRC, the Director of Public Prosecutions, the Serious Fraud Office, the Takeover Panel and the Financial Conduct Authority;
• these public authorities must confirm to the Registrar the information will be used to facilitate the performance of their public function;
• the information may be released to a credit reference agency if certain conditions are satisfied.

(The Companies (Disclosure of Date of Birth Information) Regulations 2015, 09.15)

The Companies and Limited Liability Partnerships (Filing Requirements) Regulations 2015 were published on September 18, 2015 along with an explanatory memorandum and bring into force, as of October 10, 2015, a number of consequential changes for limited liability partnerships (LLPs), Societas Europaea, unregistered companies, and companies authorised to register as a result of the amendments made to the Companies Act 2006 by sections 96, 100, 101 and 103 of the Small Business, Enterprise and Employment Act 2015.

The amendments made by the Regulations include:

• amending regulation 50 and 51 of the Limited Liability Partnerships (Application of Companies Act 2006) Regulations 2009 to reduce the timescales for striking an LLP from the register;
• amending the European Public Limited Liability Company Regulations 2004 to remove the requirement for a Societas Europaea to complete a consent to act form which notifies Companies House of the details of a new director, secretary or member;
• amending Schedule 1 of the Unregistered Companies Regulations 2009 to require the Registrar to provide newly appointed directors with information on their duties; and
• amending regulation 66 of the Limited Liability Partnerships (Application of Companies Act 2006) and Schedule 1 of the Unregistered Companies Regulations 2009 to enable the Registrar to omit the day of the date of birth of members or directors.

(The Companies and Limited Liability Partnerships (Filing Requirements) Regulations 2015, 09.15)

On September 24, 2015 AIM Regulation published guidance on AIM company disclosures relating to equity financing products involving AIM securities and in which an AIM company or its directors may have an interest. Examples given by way of illustration include equity financing facilities, equity swap facilities, and crowd-funding type products.

Complexity and non-standard terms:

AIM Regulation notes that the structure of any such facilities, including any non-standard terms, should be carefully analysed by AIM companies and their Nominated Advisers when considering disclosure requirements in order to ensure that sufficient information is disclosed to give a proper understanding to investors. This may require the provision of more detail than announcements in respect of more commonly used forms of financing and in all cases the disclosure should properly reflect the substance of the transaction.

Disclosure of Directors’ share dealings:

In addition to equity financing arrangements available to AIM companies, AIM Regulation notes that products are available to Directors of AIM companies that enable them to use their holding in the company as a means of personal financing (for example, share sale and repurchase agreements). Careful consideration should be given to the consequences of these agreements, particularly in relation to the requirement to disclose Directors’ dealings under the AIM Rules. Taking into account the broad definition of “deal” in the AIM Rules, the nature of any Directors’ dealings arrangements should be clearly and fully disclosed, generally at the time the transfer of an interest becomes binding. AIM companies should also make appropriate updates where there are subsequent changes (for example, if there are changes to a Director’s previously stated intentions or a margin call is not met).

Systems and controls for disclosure:

In respect of Directors’ personal deals, as the company is often not a party to these equity financing arrangements, an AIM company’s agreements with its Directors should ensure it can obtain all information that it will need from the Directors in order to comply with the obligation to notify Directors’ dealings under the AIM Rules.

Consideration should be given as to who within the AIM company is best placed to be involved in preparing notifications to the market where key executive directors, or a number of directors, are involved in equity financing arrangements.

AIM companies should consult with their Nominated Adviser at the earliest opportunity about the proper disclosure of these types of arrangements and Nominated Advisers should consult with AIM Regulation if they are in any doubt as to the disclosure requirements.

(AIM Regulation, Inside AIM: AIM Company Disclosures relating to Equity Financing Products, 24.09.15)