Reporting on payment practices & policies
As a part of the government’s intention to increase transparency within business, one aspect of the SBEEA is the duty of large companies to report on their payment practices and policies.
When doing business with large companies and corporations, one of the greatest challenges for smaller companies is dealing with the payment terms imposed upon them by the larger institutions; on average there is around £41.5 billion owed by large corporations to small and medium sized enterprises at any one time (source: BACS). The SBEEA will ensure that all large companies (those employing 250 or more personnel) will have to publish certain information every six months. This information includes:
- Standard payment terms (including any changes to these made during the last reporting period)
- The average time taken to pay invoices
- The proportion of invoices that are paid after the agreed term
- The proportion of invoices paid within 30 days or less, paid between 31 and 60 days, and those paid after more than 60 days.
In addition, the larger companies must report on the amount of late payment interest owed and paid, whether there were any financial incentives used to appear favorable to suppliers, their dispute resolution process and whether or not they are members of a Payment Code of Conduct.
Corporate Directors Ban
Another measure to be introduced by the SBEEA is the abolition of corporate directors. A corporate director is essentially a director of a company that is not, itself, a natural human being. In essence the abolition of corporate directors will see all company directors being traceable, identifiable, legally bound human beings, rather than nameless, faceless organisations. Part of the scope of the SBEEA is to ensure that businesses are run fairly and honestly, and the clarity in identification of the personnel who run companies is seen as a part of that scope.
Director / Registered office disputes
Over the last few years there have been a number of situations where companies have been fraudulently registered to the home addresses of innocent members of the public who have no association with the company. When legal issues arise with the company the only place for enforcement to attempt contact can be someone’s private home, or office, where there is no actual link to the company under investigation.
Under the new reporting rules set out within the SBEEA, if attempts are made to contact the company and no response is forthcoming, the registered address of the company in question will be automatically moved to the main Companies House office for the jurisdiction. This change aims to protect individuals who have had their postal address targeted by fraudulent companies.
Annual return / Confirmation statement
As well as aiming to increase transparency, the SBEEA aims to reduce duplication of information, making the submission of important information more efficient and improving the accuracy and integrity of the public companies register.
As a part of this, the Annual Return has been replaced by a ‘Confirmation Statement’ that will give companies the flexibility to confirm whether their basic information is correct and complete at any point during the year. Please read our blog on the Confirmation Statement here.
Understanding who actually runs companies has, in the past, been challenging in cases where people wish to hide their identities for any reason. The introduction of the PSC Register (People with Significant Control) aims to combat this by publishing the names of any person who holds more than 25% of the shares or voting rights of any company, or anyone who has significant control within a company. Notably, while certain information about the controlling personnel of any company will be accessible, specific information that might be used fraudulently (such as date of birth, home address etc.) will not be visible to the general public for reasons of identity security. You can read our blog on the PSC here.
All in all, the SBEEA aims to make Britain a safer and more transparent place to do business. While this may involve some legwork to make the appropriate changes, in the long run it should simplify reporting procedures, reduce duplication and complexity, and generally aid the smooth running of businesses throughout the country. If you need advice or further information about how the SBEEA might affect your business, contact any member of our Corporate team today.