Essential Corporate News – Week ending August 21, 2015

Publication August 21, 2015


Introduction

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

BIS: Nullification of ban on invoice assignment contract clauses - Government response

In December, 2014 the Department for Business, Innovation & Skills (BIS) published and requested responses to “Nullification of Ban on Invoice Assignment Clauses”, a consultation paper and draft regulations proposing to nullify contractual clauses prohibiting the assignment of receivables (the right to payment of an amount under a contract). The Small Business, Employment and Enterprise Act 2015 includes a power to nullify bans on assignment and the aim of the measure is to make it easier for businesses to access invoice finance. For some businesses, and particularly for small businesses, the only assets against which they can borrow will be invoices for payment due to them. However, a supplier’s commercial customers are currently able to contractually bar this kind of invoice assignment. On August 9, 2015, BIS published its response to the consultation paper, having taken into account all the feedback they received.

Having considered the views received, the Government has concluded that the nullification of a ban on invoice assignment clauses should:

  • apply to business to business contracts only (and not business to consumer contracts);
  • extend to all businesses, regardless of size;
  • exclude financial services contracts. This is because the functioning of some financial market products are dependent on non-assignment. For instance, in the case of derivative products between the debtor and the creditor, a ban on assignment may compromise mutuality for set off purposes;
  • exclude contracts with interests in land;
  • not create any special provisions for supply chain finance arrangements. This will allow suppliers to opt into supply chain financing arrangements or seek alternative arrangements with other invoice financers;
  • permit debtors to take action against suppliers if they breach commercial confidentiality;
  • begin from the commencement of the regulations. This means it will not apply to contracts retrospectively; and
  • only apply where the parties conduct a business to business transaction using English contract law and one of them carries on business within the UK.

BIS aims to begin the Parliamentary process after the summer break in order to commence these proposals as soon as possible.

(BIS, Government Response - Invoice finance: nullifying the ban on invoice assignment contract clauses, 09.08.15)

Companies House: Updated schedule of implementation of the Small Business, Enterprise and Employment Act 2015

On August 20, 2015 Companies House published an updated schedule of implementation of the Small Business, Enterprise and Employment Act 2015 which received Royal Assent in March 2015. Changes to the implementation schedule may occur as the associated secondary legislation passes through Parliament, but the latest schedule is as follows:

October 2015:

  • There will be partial suppression of a director’s date of birth on the public register.
  • The time it takes to strike companies off the register will be reduced.
  • The “consent to act as a director or secretary” procedure will replace the “consent to act” procedure. For newly appointed directors and secretaries, a statement will be added by Companies House to the relevant appointment and incorporation forms stating that the person has consented to act in their relevant capacity, which companies are required to agree to.

December 2015:

  • There will be a simpler way to get falsely appointed directors’ details removed from the register and disputes might be made where it is found an appointed director did not consent to act in their appointment.
  • There will be a new process to provide a remedy where a company is using an address for its registered office without authorisation.

January 2016:

  • Companies will need to keep a register of people with significant control, in preparation for the need to file this information at Companies House from April 2016.

April 2016:

  • There will be a requirement to “check and confirm” the company information by filing a “confirmation statement”, and notify changes if necessary at least once every 12 months, which will replace the current obligation to file an annual return.
  • The register of people with significant control, required to be kept from January 2016, will need to be filed at Companies House.
  • Private companies will be able to opt to keep certain information on the public register only, instead of on their own statutory registers.
  • The disqualified directors regime will be updated and strengthened.
  • There will be simplification of the statement of capital which has to be filed at Companies House.

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 and either explain how they meet the conditions for an exception or give notice to the registrar that the person has ceased to be a director.
  • Companies will be able to deliver certain categories of optional information to the registrar.

(Companies House, The Small Business, Enterprise and Employment Act is here, 20.08.15)


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