Small Business, Enterprise and Employment Act 2015 (SBEE) - Consent to Act
On 10 October 2015 new legislation will come into force which replaces the consent to act procedure for director appointments. Under the existing regime, companies must notify Companies House of a newly appointed director within 14 days of that appointment and this notification must be accompanied by a 'consent to act' from the Director.
The new legislation places an obligation upon the company (or, in the case of the formation of a new company, the subscribers to the memorandum of association), to provide to the Registrar a statement that an individual has consented to act as a director. The Registrar will also be under a new duty to write to all newly appointed directors letting them know that they have been appointed and setting out certain information including their role and statutory duties as director. This must be done as soon as practicable after the appointment has been accepted onto Companies House records. SBEE will also introduce a new procedure which will make it easier for an individual who has not consented to act as a director to have their name removed from the register, although it is worth noting that this procedure will not come into force on 10 October 2015.
What does this mean in practice?
Companies will need to ensure that they have obtained an individual's consent to act as a director prior to their appointment and that they retain evidence of this consent to act. We believe that this consent will need to be in writing and be both clear and direct. Companies should exercise caution before accepting consent electronically. The consent will need to be between the company and the prospective director: We understand from Companies House, that correspondence relating to a director's appointment between a company and its agent (for instance us) will not amount to sufficient evidence of consent. As part of any dispute process, the company will be required to provide (to Companies House) proof that consent was given. It is therefore important that companies keep copies of consents to act for their records, together with other useful documents (such as employment contracts, emails etc.), which may be helpful in showing consent, should a dispute arise.
Companies House will amend the forms which appoint directors but these will not be released until 9 October 2015. These forms and any related guidance will hopefully clarify what Companies House will consider as sufficient proof of consent. We will post updates via our firm's Linkedin account.