The document provides a summary of recent and upcoming policy changes relating to UK company law and governance, as outlined in a presentation by Peter Swabey of ICSA. Key points include: 1. The Small Business, Enterprise and Employment Act 2015 introduces several changes around bearer shares, directors' dates of birth on public registers, and other areas over 2015-2016. 2. From April 2016, most UK companies will be required to maintain a public register of people with significant control over the company and provide this information to Companies House annually. 3. Other new laws and upcoming consultations relate to the EU Shareholder Rights Directive, Audit Directive implementation, and closing the gender pay gap. 4

1. Policy update
Peter Swabey, FCIS,
Policy & Research Director, ICSA
25th
September 2015

2. Policy update
Agenda
Small Business, Enterprise and Employment Act 2015
PSC Register
Other new law :
• Shareholder Rights Directive
• Audit Directive
Consultations – Closing the gender pay gap
AGM Season 2015/16
Policy Round-up
www.slideshare.net/icsaevents

3. Policy Update
The Small Business, Enterprise and Employment Act 2015
‘SBEE Act’
A product of the Red Tape Challenge ………

4. The Small Business, Enterprise and
Employment Act 2015
A revised timetable ………….. AGAIN
Full details of the latest timetable can be found on the
Companies House website at :
https://www.gov.uk/government/news/the-small-business-
enterprise-and-employment-bill-is-coming

5. The Small Business, Enterprise and
Employment Act 2015
26 May 2015
Bearer shares were abolished. There is now a legislative
timetable in place and any existing bearer shares must be
surrendered by 26 February 2016.
If your company has bearer shares in issue there is a
statutory process on which you should already have
embarked – notices to holders were due to go out by 26
June. If you do not have this in hand, you should act
immediately.

6. The Small Business, Enterprise and
Employment Act 2015
10 October 2015
The day element of the date of birth of directors will be hidden
from the public register; the accelerated strike-off process will
be introduced; and there will be changes to the requirement to
give consent to act as a director or secretary.
December 2015
The process to rectify the register in the event of director
disputes or registered office disputes will be simplified.

7. The Small Business, Enterprise and
Employment Act 2015
10 October 2015
The day element of the date of birth of directors will be hidden
from the public register; the accelerated strike-off process will
be introduced; and there will be changes to the requirement to
give consent to act as a director or secretary.
December 2015
The process to rectify the register in the event of director
disputes or registered office disputes will be simplified.

8. The Small Business, Enterprise and
Employment Act 2015
6 April 2016
Companies will be required to keep a register of people with
significant control (a PSC Register).

9. PSC Register: policy
There are five core elements to new Part 21A of the
Companies Act 2006 (CA06):
1.The definition of a ‘person with significant control’
2.The legal entities in scope of requirements
3.Obtaining the information
4.The register
5.Disclosure of and access to the information
BIS have replicated or extended existing company law
criminal offences to deal with those who fail to provide
information or provide false information.

10. PSC Register: definition
BIS have used the existing definition of ‘beneficial owner’ in the EU anti-
money laundering context as the basis.
New Schedule 1A to the CA06 sets out five ‘specified conditions’. An
individual meeting one or more of these conditions is a Person with
Significant Control (‘PSC’):
1. Ownership of more than 25% shares
2. Ownership of more than 25% voting rights
3. Ownership of right to appoint or remove a majority of the board of directors
4. Right to exercise significant influence or control
5.Right to exercise significant influence or control over a trust or firm which trust
or firm would be a PSC, were it an individual)
In certain circumstances a legal entity must be noted in the
register (‘relevant legal entities’ or ‘RLEs’).

11. PSC Register: scope
All UK companies, except companies listed on UK
regulated or prescribed markets, will have to keep a
PSC register.
BIS will apply reform to Limited Liability
Partnerships through secondary legislation.
BIS are considering:
•Whether to exempt other types of companies subject to stringent
disclosure requirements
•How to implement the wider scope of the EU AML Directive

12. PSC Register: obtaining information
Companies must take reasonable steps to find out if they
have any PSCs or RLEs and identify them.
In some cases the company will already have this information.
In others the company will need to serve notice on individuals
and others. A person in receipt of such a notice is required to
reply. Failure to do so is a criminal offence. Shares may also
be subject to restrictions by the company.
PSCs and RLEs are also required to disclose their interest in
the company to the company in certain circumstances.

13. PSC Register: the company’s register
Companies must hold and keep available for public inspection a
PSC register. This will contain information on the PSCs’:
•Full name
•Service address
•Country or state of usual residence
•Nationality
•Full date of birth
•Usual residential address (not publicly available)
•Date on which PSC obtained control
•The nature of his or her control over the company
Register must be kept up to date as information changes.
People may access the register on request.

14. PSC Register: the central register
Companies must provide all the information in their PSC
register to Companies House on incorporation and then at
least once every 12 months as part of the new confirmation
statement.
All information will be made available on the public register
except:
• The full date of birth (only the month and year will be
shown on the public register, except where the company
elects to keep its PSC information solely on the register
at Companies House)
• The usual residential address

15. PSC Register: the protection regime
Individuals at serious risk of harm will be able to apply to
the registrar of companies to prevent their information being
publicly disclosed on the company’s register and the central
register.
Specified public authorities will have access to protected
data on request.
BIS have recently consulted on this regime -
https://www.gov.uk/government/uploads/system/uploads/attachment_data/file/43
7974/bis-15-315-register-of-people-with-significant-control-consultation.pdf
Covers the scope, nature and extent of control, fees, the
protection regime and warning and restrictions notices

16. PSC Register: guidance
Two types of guidance:
•Statutory
•Non-statutory
The legislation requires the Secretary of State to publish
guidance on the meaning of ‘significance influence or control’
in the context of the PSC register.
This statutory guidance has legal effect and will be
produced by BIS.

17. PSC Register: guidance
Non-statutory guidance will be produced by a working group
acting on behalf of BIS and will address issues like:
•What is a PSC or an RLE and what do they need to do
•What information is being collected and why
•Who can access it and how
•Which companies are affected and what they need to do
•What ‘reasonable steps’ means
•What to do if you don’t receive the required information
•How to manage your PSC Register
•What to do if you are a PSC

18. PSC Register: guidance
The plan is to publish the draft guidance in October for
consultation, and final guidance in January in advance of
when statutory duties kick in in April.
Feedback on what you would like to see included in the
guidance welcome.
pswabey@icsa.org.uk

19. PSC Register: ACTION
Companies should start considering whether they have one or
more PSC’s. If they do, ensure that these people can be
identified and data collected. Although DTR5 companies
(which have to comply with the Listing Rules) and some
others are exempt, the new requirements do apply to the
subsidiaries of such companies.

20. The Small Business, Enterprise and
Employment Act 2015
30 June 2016
The new ‘check and confirm’ annual confirmation statement
will replace the annual return. Companies will be required to
begin filing their PSC Register information at Companies
House. Private companies will also be able to choose to keep
some of their registers at Companies House on their check
and confirm date. The process for disqualifying directors will
be ‘updated and strengthened’ and the statement of capital
will be simplified.

21. The Small Business, Enterprise and
Employment Act 2015
1 October 2016
With specified exceptions, companies will no longer be able to
appoint corporate directors; they will have 12 months to remove
any existing corporate directors that are no longer allowed under
the exceptions.
BIS have been consulting on the exceptions to the prohibition of
corporate directors. The implication is that companies will still
be able to use corporate directors for administrative purposes,
provided that all the directors of the corporate director are
real people. It would be prudent to identify situations
where your company use corporate directors and
consider how you will comply with the new rules.

22. The Small Business, Enterprise and
Employment Act 2015
Late 2016 / early 2017
Some additional information will be able to be filed at
Companies House – no doubt we will hear more closer to the
time.
The UK implementation of the EU’s 4th Money Laundering
Directive, expected in 2017, will have an impact on the filing of
PSC Register information – we await information about the
impact of this change.

23. Policy Update
Other new law
Shareholder Rights Directive
Audit Directive implementation

24. Shareholder Rights Directive
Luxembourg presidency met with the Commission and Member
State representatives last week to discuss reaction to the text
agreed by the Parliament.
Most of discussion around remuneration and related party
transaction articles
Also a political issue over country by country reporting
Next meeting end September / early October

25. Audit Directive implementation
BIS announcement on 8th
September
https://www.gov.uk/government/publications/eu-audit-directive-
and-regulation-implementation-update/update-on-the-
implementation-of-the-eu-audit-directive-and-regulation
BIS is continuing to work with the FRC, Financial Conduct
Authority (FCA), the Prudential Regulation Authority (PRA) and
the Professional Bodies to implement the requirements of the
Audit Directive and Regulation.
The reforms take effect on 17 June 2016.

26. Audit Directive implementation
BIS consultation
To be published in the next few weeks, focus on:
•the definition of a public interest entity (PIE)
•FRC powers and Professional Bodies’ responsibilities
•mandatory retendering and rotation of PIE auditor
appointments.

27. Audit Directive implementation
FRC consultation
Also imminent, and focussed on the detail of implementation.
This will include :
•types of entities in scope
•prohibited non-audit services to audit clients
•application of independence principles across firms’ networks
•audit firm and key audit partner rotation
•amending existing auditing standards following recent revisions
to international auditing standards

28. Audit Directive implementation
FCA and PRA consultations
The FCA will be consulting on Audit Committee requirements
applying to entities with securities admitted to trading on a
regulated market, as an update to the Disclosure Rules and
Transparency Rules (DTR) in the FCA handbook, which are
supported by the FRC’s Corporate Governance Code.
The PRA will be consulting in mid-September on Audit
Committee requirements for banks, building societies and
insurers regardless of whether or not they have issued
transferrable securities. If a firm falls within both the scope
of the FCA and PRA Audit Committees rules, the PRA
intends it should comply with both sets of rules.

29. Policy Update
Consultations
13th
July – BIS : PSC Register regulations
23rd
July – BIS :PSC Register regulations – protection regime
19th
August – FRC : Small company reporting
4th
September – GEO : Gender Pay Gap

30. Policy Update
AGM Season 2015/16

31. AGM Season 2015/16
NAPF report
http://www.napf.co.uk/PolicyandResearch/DocumentLibrary/044
4-2015-NAPF-AGM-Report.aspx

32. AGM Season 2015/16
NAPF report
•3rd
annual review
•2015 ‘a relatively quiet year’, but …….
•12 FTSE350 companies had a significant ‘against’ vote on a
governance issue at the AGM for the second year running
•The top 5 FTSE100 and top 10 FTSE250 shareholder
rebellions – including two lost remuneration reports
•Some companies with more than 15% vote against one or more
directors

33. Policy Update
Policy Roundup

34. Policy Roundup
Stewardship
ICSA is working with a number of partners to help the FRC
review the extent to which the Stewardship Code has begun to
have an impact on company and investor engagement
Working with the Investment Association and the NAPF
Guidance on more effective stewardship

35. Policy Roundup
New Government
Very keen on deregulation
New incarnation of the red tape challenge
Continue to emphasise the need for a company secretary in all
companies

36. Policy Roundup
Ethics and Culture
Working with the IBE and Mazars on a piece of research
looking at business culture

37. Thought leadership from ICSA
37