Category : Corporate News

Damage to a charity’s reputation often diminishes the level of trust in the charity on the part of its donors and supporters, leading to a decline in funding. Reputation of a charity is a key influencing factor in a prospective donor’s decision to donate to that charity.

Damage to Reputation

Reputational damage can arise from a number of causes. For example, supporters might become aware of a serious incident which reduces their confidence in the charity. A serious incident at a charity might consist of fraud, theft, significant financial loss, abuse or serious harm of beneficiaries, links to extremism, investment in or support by an organization whose aims or activities are at odds with those of the charity, or loss of personal data (e.g. theft of a charity laptop containing personal details of beneficiaries, staff or donors, or the hacking of IT systems to obtain such details).

Improper Processing of Donor or Supporter Personal Data

Other matters can also adversely affect reputation, and in this post, we are focusing on one in particular: a charity’s failure to deal with donor/supporter data correctly. A number of well-known charities were recently fined by the Information Commissoner’s Office (ICO) for misusing donors’ personal data. Media coverage adversely affected not only the reputation of the particular charities involved, but also that of the charity sector generally.

The ICO found that the charities concerned had been using personal data of individual donors in ways which breached the Data Protection Act 1998 (DPA). The breaches comprised failure to be sufficiently transparent about the charity’s use of donors’ personal data, and failure to obtain their consent to that use of data. The charities had been sharing personal data with other charities, using personal data to estimate donors’ wealth (wealth screening), and using what personal data they had about individuals to discover missing information (data matching), all without being transparent or having consent from those donors to do so.

How Will the GDPR Affect Fundraising?

These issues have come increasingly to the fore because of the impeding implementation of the European General Data Protection Regulation (GDPR) which will require all organizations, including charities, to comply with new consent and transparency requirements that will be tougher than those under the DPA. If a charity fails to comply with those GDPR requirements, there will be a consequent decline in its reputation because people will tend not to trust it to deal properly with their personal information. That distrust will have a clear and direct adverse twofold impact on donations. Firstly, potential supporters/donors will be disinclined to donate to the charity (or even make contact with it with a view to supporting it in some other way). Secondly, current or past donors will no longer be inclined to donate, and they might ask the charity to no longer contact them and to delete their personal information. In order to ensure that donations to charities do not fall due to misuse of donor information (and to avoid the risk of substantial fines for breaching the GDPR) it will now be more important than ever that charities review their fundraising practices to ensure that they comply with the transparency and consent requirements of the new GDPR in relation to personal data of donors and others. The ICO has issued draft guidance on data protection and consent under the GDPR, and the Fundraising Regulator has recently issued a best practice guide, “Personal Information and Fundraising; Consent, Purpose and Transparency”, available here, designed to help charity trustees understand their responsibilities under the GDPR.

Even if a charity has met the transparency requirement to tell individual donors that they are processing their data, what it is being processed for, and any other information needed to make it fair to process the data, the charity also needs to establish a clear legal basis for using the data. We will not try to cover that in any detail here, but in general terms this means – depending on the particular circumstances – either having a “legitimate interest” for that use, or consent to that use. Where consent is required by the GDPR (e.g. for direct marketing by electronic means), it will be express consent that will be required. This will be stricter than under the current law, and as a result it is now a hot topic. The existing DPA consent requirements will be tightened up under the GDPR so that from May 2018, the data subject must have the right to withdraw consent at any time and it must be as easy to withdraw as it is to give, and consent mechanisms will need to be genuine and granular (‘catch-all’ consents will likely be invalid), and individuals must take affirmative action to provide their consent such as signing a form or ticking a box.

What Will be the Effect of Complying with the GDPR?

There are two opposing general attitudes to these changes, and we would like to hear your views about them.

One view amongst charities and critics is that those outside the charity sector (including legislators and regulators) do not understand fundraising and have approached it in a legalistic way without taking account of reality, with the result that the GDPR and the manner in which it is interpreted by regulators will lead to fundraising being destroyed in some charities. In particular, they see “opt in” (express) consent as leading to decline in fundraising because it requires a positive act whereas the normal tendency is towards inertia. The argument is that when one looks at the donor experience in practice, donors do not need or want to have to opt in, and they would be just as satisfied with an effective system that allows them to opt out of contact quickly and easily. Those against the new strictures of the GDPR also point out that the burden imposed by the GDPR on fundraising involves charities having to spend a great deal of time and money working on implementing strategies and processes to comply.

The opposite view is that the new requirements of the GDPR actually create an opportunity for charity fundraisers to increase donations and contact with supporters. The argument is that by complying with the GDPR, charities will actually improve and increase engagement with donors, and will build and strengthen trust amongst existing and prospective donors, and that this will outweigh the issues raised by those who take a negative view of the effects of GDPR on fundraising. The proponents of this positive view say that complying with GDPR will entail charities explaining why data is being collected and what it will be used for, that this can be coupled with an explanation of how the funds raised will be used, and that this will encourage individuals to “opt in” to being contacted and to allow use of their data in the way the charity has explained.

On which side of the argument do you stand?

There are five major risks to the wellbeing (or even the existence) of small charities in the UK: decline in funding and donations, damage to reputation, inadequate insurance cover, loss of data, and fraud.

Funding

In this post, we are focusing on funding. Many small charities are in crisis due to lack of adequate income. On average over the past three years, when earned income, voluntary income and statutory income sources are placed together, it appears that small charities have only experienced a total overall growth of 3%. What can be done to improve the situation?

Voluntary Income

The charity sector relies heavily on voluntary income. The National Council for Voluntary Organisations (NCVO) found in 2016 that the overall trend for voluntary income is that it has been flatlining for some time. This has been the experience of small charities in particular. In a recent edition of a quarterly report produced by the Foundation for Social Improvement’s (FSI), it found that total voluntary income of small charities since 2013 has only increased by 1%. This is causing increasing difficulties for many small charities trying to bridge the gap between static income and a significant rise in the demand for their services.

Why Has Voluntary Income Not Increased?

A number of factors have affected voluntary income levels. Fundraisers at small charities are having to contend with an increasingly challenging environment. Although public trust in small charities delivering local services is still relatively high, as at mid 2016 there was a fall in public trust of charities’ fundraising methods to the lowest level since 2005 although there are now some signs that public trust is now growing). There is less disposable household income than in the past, and so a lower level of donations. Corporate donations have fallen. Many smaller charities find that their message is being lost due to larger charities presenting a challenge to their fundraising efforts. There is the potential for the economy to perform less well following the Brexit referendum vote with the consequent real threat that there will be a reduction in charitable donations. Regulation of fundraising has also become tougher, and trustees’ responsibilities in relation to fundraising activities are now greater.

What Has Happened to Other Forms of Income?

Over the past three years, charities’ statutory income has dropped by 8%. Since the 2008 financial crisis, small and medium-sized charities have lost substantial income from central and local government in the form of both grants and contracts. With voluntary income of small charities remaining static or falling in some cases, many are struggling. Some small charities who have been reliant on statutory income find that their voluntary income does not sufficiently compensate for falls in their statutory income. An increasing number of small charities are having to dip into reserves in order to continue their day to day work. This trend is worrying, especially in view of the fact that a substantial proportion of small charities do not hold any reserves.
However, in contrast, over the same period the level of charities’ earned income has increased by 9%. Charities’ earned income includes fees for their services and also income from selling goods or services to raise money.

Increasing Small Charities’ Income

So, there is a need to increase income of small charities across the UK. How can they achieve an increase, and which type(s) of income can they realistically increase?

Data seems to indicate that in comparison to larger charities, small and medium-sized charities have proportionally lost more of their government income and gained less income from individuals, and they can expect to see little rise in income from donations or government.

However, small charities have increased their earned income very significantly. Although this has not been enough to cover all lost income from government, it has replaced some of that shortfall. Between 2007/08 and 2014/15, across all of the charity sector earned income from the public grew 35% while donations from the public grew only 6%. According to NCVO analysis, earned income is the best prospect for future growth.

Are small charities trying to increase their earned income? Should they try to do so further? Will they be able to do so?

It appears that some charities – especially those which have seen no increase in government funding – have set out to alter their approach to generating income. For example, charities have developed partnerships with other charities or merged with other charities, and some have made use of financial mechanisms such as social impact bonds and creation of social enterprises. Increasing earned income may involve setting up a trading arm of a charity, market research, upskilling finance and other staff, and taking greater commercial risks. It might be a new type of activity or service or it might be selling services to the public using existing expertise already used or developed within the charity.

For some charities, “earned income” is now a major part of their total income, but for smaller charities, i.e. those more likely to have lost voluntary or statutory income, it may be difficult to establish and maintain an earned income stream especially where they lack the necessary skills and resources.

What has been your experience?

The House of Lords Select Committee noted in its recent Report “Stronger Charities for a Stronger Society” (March 2017, available here) that registered charities in England and Wales with an annual income of less than £100,000 make up almost three quarters of the sector.

These smaller charities contribute significantly to the wellbeing of the nation, but, given the voluntary nature of trusteeship, charities have for some time found it difficult to recruit suitable trustees. It is worth noting that the average age of trustees is 57 and rising, half of all charities have vacancies on their boards (with many struggling to fill those vacancies), the age and gender profiles of trustee boards differ significantly from those of wider society, and the recruitment problem is being exacerbated by trustees being overburdened with responsibility or regulation.

The Growing Burden of Regulation

As the Report found, being a trustee has become more challenging: the environment for charities has changed substantially (particularly as a result of increased financial pressures and significant shifts in funding models), and there are also additional legal and regulatory requirements to comply with, such as new data protection regulations and fundraising standards. The Charity Commission noted in evidence to the Select Committee that navigating these challenges required “strong strategic leadership and the ability to take managed risks; we see many boards failing to rise to the occasion”.

Lack of Knowledge of Trustees’ Roles & Responsibilities

Evidence submitted to the Select Committee indicated that many new and existing trustees were not really familiar with the role, its requirements, and responsibilities (although, following the collapse of Kids Company, trustees have become more conscious of their responsibilities). This is a problem for small and medium sized charities (as well as for some larger charities) since, irrespective of the size of a charity, the role of trustee (although an honorary position), carries with it legal duties, responsibilities, and potential liabilities, and crucially, trustee boards need to have both the necessary knowledge of their legal responsibilities and the necessary range of skills between them to enable them to carry out their responsibilities correctly.

Additional Risk of Personal Liability if Your Charity is Unincorporated

Against this background, we are concerned that trustees of small and medium sized charities often bear a potential risk over and above the risks and responsibilities borne by trustees of larger charities. This stems from the fact that rather than being set up in a corporate form (e.g. as a company limited by guarantee or as a CIO), smaller charities are more likely to be set up as “unincorporated associations” or “trusts”. As we explain below, this increased risk arises from the lack of “separate legal personality” that a corporate form provides.

Whether a charity is in corporate form or it is an unincorporated association or trust, failure of a trustee to discharge his/her governance liabilities is a personal liability of each trustee (“breach of duty” or “breach of trust”) and any resulting loss to the charity is the trustees’ personal liability. Where a trustee has acted honestly and reasonably, the Charity Commission is less likely to enforce that personal liability. Trustees will also have personal liability if the charity is insolvent and they have engaged in wrongful or fraudulent trading, or if they fail to file certain documents, or they breach certain health & safety, environmental, discrimination, tax, or other laws.

Where the charity is incorporated, its liability for debts and other liabilities incurred by it (for example, to suppliers or staff) remain its sole liability even if it has insufficient assets to meet the liability – its trustees will not also be personally liable. Establishing a charity in incorporated form will therefore mitigate potential exposure to personal liability of trustees for a charity’s debts and other financial liabilities. There has been a growing trend towards use of incorporated vehicles for charities. The usual form is the company limited by guarantee but charities may also use the CIO form introduced by recent charity legislation.

Compare this to a charity which is an unincorporated association or trust: its trustees might also incur personal liability due to the activities of the charity (i.e. not due to their own conduct as trustees). For example, a charity might provide services to a local authority, or hold a lease on premises, or employ staff. In each case, the charity will have a legal relationship under which it could become liable to another party. The trustees might also become personally liable as a result of that liability of the charity (even though they may personally have acted properly) since they are in effect the organisation and they can be sued as individuals. All liabilities of their organisation will be theirs, but they will normally not be ultimately liable (i.e. the liabilities will be met out of the assets of the charity). However, if the charity does not itself pay a debt or some other liability of the charity, and it has insufficient assets to meet liabilities, the trustees could be personally liable to the extent of the shortfall. Although it is rare, it is not impossible for trustees of an unincorporated charity to be held personally liable in this way for the activities of their charities. This was illustrated in a recent decision of the High Court in the case of Chandra v Mayor (2016) where it was affirmed that each member of an unincorporated charity’s trustee board was personally liable for the charity’s wrongful dismissal of an employee.

Should There Not Be a Level Playing Field for All Charity Trustees?

Trusteeship carries important responsibilities and that message needs to be clear. Against this, there is a need to encourage volunteers to take up trustee roles since, as the Charity Commission points out, volunteer trustees play a vital role in a sector that contributes significantly to the character and wellbeing of the country. So, if many people consider that it is reasonable to remove the potential for personal liablility of trustees arising solely from the fact that their charity is unincorporated rather than incorporated, shouldn’t legislation be introduced to protect trustees from that personal risk?

We would like to hear from you on this. Do you feel that, to remove this risk from their trustees, charities should have to go to the trouble and expense of incorporating, and then incur the ongoing additional trouble and expense attached to maintaining a corporate entity, given that most charities have very limited resources? Should there not instead be a simple piece of reforming legislation which has the effect of removing this inequality between incorporated charities on the one hand and unincorporated charities on the other hand? Your thoughts, as ever, are encouraged and welcome.

To remain financially stable in today’s competitive climate, a charity needs to run its operations with business-like standards.

Just like a business, many not-for-profit organisations have a board of directors, executives, human resources personnel and a marketing department. So why run a charity differently from a business just because the goals are different?

Successful not-for-profit organisations have strategic plans, keep financial records and have audits, so it’s important to invest in key aspects of the charity, just as you would with a business, to help it make a difference.

Importance of effective strategies

When a business is doing well, consumers realise the value of purchasing its products or services. When a charity is doing well, donors enjoy seeing the rewards of doing something good. A charity needs a competitive, effective strategy to help it support its beneficiaries. Typically, charities have less resources and capital for investment so, in a way, it’s even more important for good business sense to play a role.

The not-for-profit sector must ‘do more with less’ in every way, so needs to think differently to be more innovative and creative with what it has. In order for charities to experience business growth, sustained quality investment to promote their goals and values is crucial. A charity’s success should be measured by how its investments help it to raise more funds and do increasing amounts of good work. Charities should work to a set of standards that include leadership, transparency and results.

Streamline operating processes

The best way for charitable organisations to save on running costs is to work towards achieving streamlined processes with well-trained leaders, as spending vast amounts of money on staffing is not feasible and can eat away at funds better spent elsewhere. To this end, charity leaders could benefit from taking advice from small businesses; something that many may not even consider because they have never viewed themselves as a business.

As with business investors, charity investors wish to see the results of their investment. To produce a sustained and strategic impact, charities must be run like a business, with strategy, discipline and a strong focus on outcomes.

Be accountable

Any organisation receiving charitable support must be as accountable to the donors as a company’s board is to the shareholders. In a way, the donors are the stakeholders and therefore should be able to understand the ‘return’ on their investment.

Otherwise, they may feel as if they’re throwing their money into underperforming organisations that aren’t spending it in the most effective manner. Anyone who supports any cause has the right to expect effective strategies and efficient operations to put their money to best use.

For example, if an organisation is seeking to provide greater community amenities, it can prove the impact it’s having by counting the number of wells it has built in central Africa, or the number of playgrounds provided for poorer inner-city areas.

Management skills

Management skills are often as important as technical know-how. Trustees should search for chief executives who have the right qualities and skills to lead their organisation. Charities can benefit greatly from the experience of managers in the field who can make qualitative judgments based on comparing costs with benefits.

Putting the focus on efficiency and outcomes will work for any type of charity, no matter who the beneficiaries are. Whatever the mission, there must be a balance between expenses and revenue, with goals being set so that funding will continue.

There’s no aspect of running grass-roots and charitable movements that won’t benefit from a disciplined approach. Adopting sound business principles will make a charity more likely to accomplish its goals.

Overcoming sector challenges

It’s not always easy for charities to think like businesses. Due to the nature of the causes they support, some may find it more difficult to show clear, measurable goals. However, that doesn’t mean they shouldn’t try, as they owe it to the donors, managers, the board, the beneficiaries and the employees to adopt the best strategy possible to achieve their aims.

In today’s technical age, when the internet has made it easy and inexpensive to collect data of all kinds, anyone who is passionate about a charity’s work has more options to find out how it’s performing. Collecting data can measure results, enabling the charity to improve its performance.

Metrics should be seen as useful tools, rather than shackles. They can improve the effective use of money, time and people. A dream with a firm plan behind it has a better chance of becoming a reality.

Skilled people at the top

Today’s charities are a far cry from those that started life in the Victorian era to help impoverished sections of the community. In reality, many of today’s national and international charities resemble multi-million pound businesses, with funding coming from many quarters. As such, the managers should possess the skills to run an organisation of this size.

Charities must focus on squeezing the best value out of every pound that’s donated. By stripping out unnecessary administration costs and streamlining operations, efficiency savings can equate to more money being donated to those who need it.

Long-term focus

Strong leadership and effective business acumen are transferable skills that can benefit not-for-profit organisations. Some new charities fail within a relatively short period of being launched. In order to have a sustainable, long-term impact, a charity must focus on achieving its intended outcomes and also making a surplus.

Otherwise, it will be extremely difficult to continue operating, because in addition to fundraising for your cause, expenses must be taken into account, such as salaries, bills and other running costs. It’s crucial that finances remain steady because, however worthwhile the cause, if it’s being run by someone who can’t balance revenue and expenses, it’s going to end up in debt and will fail. Just like in business, it all comes down to maximising efficiency by having a good strategy, business-minded people in control and strong discipline to work towards a goal.

How can we help? Simply-Docs have a wide selection of ready-to-use document templates designed to help charities run more efficiently.

Private companies have traditionally been the weak link in corporate transparency but as of 6th April, 2016, this is all about to change. Publicly listed companies are subject to a much more stringent disclosure regime and for many companies, even larger ones, the lack of disclosure around who owns or controls a private company has been one significant reason to operate through this vehicle. A private company has not, up to now, had to look beyond who its registered shareholders are, allowing private trust and nominee arrangements to flourish. This has meant some companies may not even be aware of who actually owns or controls them, let alone anyone outside the company knowing.

What is changing?

The Government has stated that in order to tackle tax evasion, money laundering and terrorist financing as well as to increase trust in UK corporates more generally, it will require UK companies, Societates Europaeae and Limited Liability Partnerships (LLPs) to become more transparent. It will do this by requiring companies to keep a register of individuals or legal entities that have control over them (a PSC register). The only entities to which the new regime will not apply are UK listed companies (those subject to DTR 5 of the Financial Conduct Authority’s Disclosure & Transparency rules). Broadly this means companies listed on the London Stock Exchange and AIM, and UK companies with voting shares admitted to trading on a regulated market in another EEA state or on specified markets in Switzerland, USA, Japan or Israel. All other UK incorporated companies limited by shares or guarantee, including dormant companies and community interest companies are within scope, as well as UK Societas Europaea and UK LLPs. The regime is therefore all-encompassing in its scope.

Overseas entities operating in the UK, whether through a branch or otherwise, are not subject to the new regime.

When is it changing?

All UK incorporated entities within scope will need to keep a PSC register from 6th April 2016. As one of the main stated aims of the PSC regime is to increase transparency, from 30th June 2016, they will also need to file their PSC information at Companies House when making their annual confirmation statement (which replaces the annual return). The information at both Companies House and on a company’s individual register will be publicly available. Although residential addresses will remain private and will not be publicly disclosed, for the rest of the information, companies or affected individuals will have to prove that there are “exceptional circumstances”, i.e a serious risk of violence or intimidation, in order for it to be suppressed.

Non-compliance with the PSC register requirements is a criminal offence.

What will need to be registered?

The details of any individual or legal entity that owns or controls (directly or indirectly) more than 25% of a company (or LLP) will need to be registered. Who is a PSC and a registrable relevant legal entity and what details need to be registered for each, are set out in the legislation and there is also Government guidance on the meaning of significant influence or control.

The PSC regime requires companies to take five steps:
Identify PSCs;
Obtain and confirm this information;
Record the details in the PSC register;
Provide this information to Companies House;
Monitor and update this information.

A PSC register can never be blank. Even if a company has no interests to register, for example it has 5 individual shareholders each holding 20% of its shares, it must still maintain a register and include prescribed wording in it to reflect that it has no individuals with registrable interests.

Sounds confusing – what about the Government’s stated aim of reducing red tape for SME businesses?

In many ways this new regime does fly in the face of reducing red tape for SMEs. However the difficulty a company has in obtaining the information to include in the PSC register, completing and then maintaining it, will very much depend on how complex a company’s structure is. The Government has produced comprehensive guidance that is user friendly and designed for directors, shareholders, company secretaries and designated members (LLPs). However it is still fairly weighty for those unused to wading through guidance and applying it to one’s own company without the help of professional advisers.

What can we do to help?

We’ve tried to take the stress out of this looming change for you by producing a comprehensive package of new template notices, documents and guidance to assist you in getting your PSC Register up and running and making sure you comply with the many statutory requirements of the new regime. Our package includes templates to cover all the main aspects of the regime. These are now ready to download here.

You’ll need to act quickly however, the obligation is to have your register in place by 6th April 2016 and as the information in it needs to be confirmed, notices need to start being sent out to PSCs now.

This blog looks at what the new Act is, its implementation into law, key changes and what you should be doing now to prepare for some of the more significant changes due to take place.

What is the new Act?

The Small Business, Enterprise and Employment Act 2015 received Royal Assent in the last days of the previous parliament. The Act contains a number of measures which together represent significant change for companies and Companies House customers. The Act is being phased in over a nine month period, with the most significant (and controversial) changes due to come into force in 2016.

The government’s stated aim is that the Act should reduce red tape for SME businesses whilst increasing the quality of information on the public register. It also aims to enhance transparency and ensure the UK is seen as a trusted and fair place to do business.

When is it being implemented?

Certain parts of the Act are already in force and the rest will come into effect over the next nine months, with the bulk of the implementation being in 2016. There are, however, certain important changes in relation to the way directors consent to their appointment (as company directors) that are due to come into force on 10 October 2015.

For our updated template material in relation to this new consent procedure, click click here.

What are the key changes?

One of the major changes is that there is to be a register of ‘persons with significant control’ over companies. Private companies must maintain a register of people who hold – directly or indirectly – more than 25 per cent of the shares in a company from April 2016. This information must also be filed with Companies House as of June 2016.

However, for some companies, this register will prove a big and troublesome exercise, and could be said to fly in the face of the government’s red tape challenge and objective of saving time and money for companies.

Another important change is that the requirement to submit an annual return to Companies House will be abolished. Instead, companies will be required to confirm once a year in a ‘confirmation statement’ that the filing of statutory information is up to date and notify of any changes.

Yet there is concern that some companies will confirm everything is up to date without checking to see whether this is actually the case, and over time the quality of the Companies House register may deteriorate. Furthermore, the register may also become progressively harder to use, as the current ‘snapshot’ approach of the annual return is lost.

What should I be doing now?

Simply-Docs has produced a range of documents to cover the parts of the Act that have been implemented already. In addition, we have produced this information page, which includes headline points that SME businesses need to be aware of and their implementation dates.

We will add to our range of documents in due course. as and when other implementation dates approach. However there are some practical steps that companies can take to prepare themselves, particularly in preparation for the new register of ‘persons with significant control’.

This includes finding out who has significant control of the company now, before contacting these people to confirm their shareholding and explain the types of information that they will need to provide to the company going forward. Doing this now will make the whole process of meeting your company’s statutory obligations much easier in 2016.

Changes to company law and corporate administration are due at the end of the year as part of the Small Business, Enterprise and Employment Bill (the Bill). The intention of the Bill is to help small and medium sized businesses compete and grow. By promoting accountability and transparency it is hoped that further investment will be attracted to the UK: Trust and integrity are deemed integral to enhancing Britain’s reputation as a place to do business.

The Bill is wide ranging – covering issues such as the regulation of pubs and childcare as well as minimum wage and zero hours abuses. So far publicity has focused primarily on invalidating exclusivity clauses in zero hours contracts. Other significant changes for SME’s in the Bill and on which we will provide greater detail in due course include:

– SME access to finance;
– Government to frequently review the burden of red tape:
– Providing greater simplicity and consistency to public sector procurement;
– Streamlining insolvency law;
– Reforming whistleblowing procedures; and
– Reducing delays in Employment Tribunals;

Below are the prime changes to company law and corporate administration.

1. More streamlined process to company registration and filings
2. A new register in respect of beneficial ownership (Persons with Significant Control – 25%) of private    limited companies by shares
3. Abolition of bearer shares
4. Abolition of Corporate Directors
5. Updating of director disqualification regime
6. Statutory duties of directors to be applied to shadow directors.

Please click for full details.

These changes and their implementation are/will be complex so there may yet be delays and there will be significant costs.

The assessment of the Department for Business, Innovation and Skill (BIS) projected a minor cost to the Government but the cost to business in the first year is estimated at £500m followed by £80m each year thereafter. Hopefully, these changes to company law and administration will improve transparency, but does this tally with the Government’s claims to reduce red tape and be supportive to small business?

Please add your comments below.