Connecting North West business to relevant training, insight, conversation and each other
Small Business, Enterprise and Employment Bill
The Small Business, Enterprise and Employment Bill is currently making its way through Parliament and contains a number of amendments to reduce the barriers that can hamper the ability for small businesses to innovate, grow and compete.
A number of measures are contained in the Bill, including:
Access to finance
Currently many small businesses struggle to access the finance they require in order to expand. The Bill will introduce measures to:
- Improve access to finance by removing legal barriers to invoice finance.
- The Bill allows the Secretary of State to invalidate clauses in business to business contracts which prohibit businesses selling their invoices to a third party finance provider. This will allow small businesses to have another financing option available to them.
- Incentivise businesses to improve payment policies and practices.
- There have been a number of proposals that may be introduced to prevent/ discourage companies from paying suppliers late or imposing long payment terms. The Bill will help small businesses negotiate and agree fair payment terms to ensure more invoices are paid on time.
- Encourage competition in banking
- By enabling businesses to conduct accurate risk assessments, it will be easier for them to seek a loan from lenders other than their bank. By improving data transparency and allowing data sharing (where a business consents) new finance providers will be able to offer finance to businesses where they would otherwise by unaware of the opportunity to do so, thus creating a diverse credit market.
- Provide for an innovation called cheque imaging to make it easier and quicker to pay in cheques - reducing clearing times from up to 6 days to less than 2.
The Bill recognises that there is some burdensome regulation imposed upon small businesses.
The Bill will introduce measures to:
- Save time by creating a more streamline process to incorporate a new company and register for tax purposes online.
- Ensure the business use of a home will not result in the creation of business tenancy.
The Bill will introduce measures to increase transparency surrounding ultimate control and management of UK companies. As currently proposed the law will:
- Require UK companies to keep a register of people with significant control over the company. A person has significant control if they own over 25% shareholding. This will increase transparency and promote good corporate behaviour. This register will be publically accessible and maintained by Companies House.
- Prohibit the use of corporate directors - although some limited exception will be set out in the regulations.
- Impose director’s duties on shadow directors.
Company filing requirement
The Bill aims to simplify the current filing requirements for companies. For example, it will replace the requirement of filing Annual Returns with ‘check, notify changes if necessary and confirm’ every 12 months.
The Bill will modernise and strengthen the director disqualification regime to give businesses and consumers greater confidence that wrongdoers will be barred as directors.
The Bill aims to do this by:
- Strengthening the rules that prevent individuals from acting as directors if they have committed misconduct. For example the period within which an application for disqualification order against an unfit director has been extended from 2 years to 3 years. Furthermore, the court may impose a compensation order against a disqualified director on application from the Secretary of State.
- Introducing new grounds for disqualification, such as disqualification of a person who causes director to behave in an unfit manner, and disqualification of a director convicted abroad of an offence related to the running of a company.
- Update matters which court needs to take into account when considering directors disqualification, such as taking into account a person’s conduct in relation to more than one company when deciding whether or not to make a disqualification, and taking into account the conduct of a directors of an insolvent company in relation to an overseas company.
The Bill will streamline insolvency law to remove unnecessary costs and ensure effective oversight of insolvency practitioners.
The change of legal requirements will affect most private companies, impacting upon their systems and processes. However, if enacted, the Bill will streamline many formal legal requirements and open up new opportunities for small firms to innovate, compete and get finance to create jobs, grow, and export.
The Bill is currently passing through the House of Lords and we envisage changes being implemented as part of this process. We will keep you updated on any progress of this Bill.