Bill set to bring changes for businesses - Palmers Solicitors

Bill set to bring changes for businesses

New legislation designed to help businesses grow and become more competitive includes some significant changes for businesses and their directors.

The Small Business, Enterprise and Employment Bill, which is currently progressing through parliament, brings together wide-ranging measures in areas including access to finance, public sector procurement and insolvency.

It will also introduce measures to simplify the current filing requirements for companies and to improve company transparency, including by banning the use of corporate directors – one company acting as the director of another – with limited exceptions. It will also apply the same legal duties to shadow directors – someone who is not a director but actually controls a corporate entity – as are already imposed upon individual directors.

On employment-related matters, the Bill will create “strong financial consequences” for businesses that fail to pay employment tribunal awards and increase penalties for employers that fail to pay workers the national minimum wage legislation on a per worker basis.

It will also make exclusivity clauses in zero hours contracts invalid so that no-one can be tied into a contract without any guarantee of paid work.

The Bill introduces several measures around director disqualifications, which the government says will “give the business community and consumers confidence that wrongdoers will be barred as directors”. These include

  • enabling disqualification proceedings to be taken in the UK where there has been misconduct, or directors have been convicted, in overseas companies;
  • increasing the period of time within which disqualification proceedings can be taken following a formal insolvency from two to three years; and
  • allow a compensation order to be made against a disqualified director where his or her misconduct has caused identifiable loss to creditors.

The Bill is scheduled to undergo line by line scrutiny in its committee stage in mid-October, with a report due to the House of Commons on 6 November.

While the legislation has yet to be finalised, companies and their directors may find it helpful to take legal advice now on the implications of the proposed changes, in order to start preparing for these.

For expert advice on matters relating to company law and directors’ responsibilities please contact BJ Chong or for guidance on employment issues, please contact our Employment Law team.