New business regulations come into force

In an effort to simplify the way in which new business rules are introduced, the government has established two dates each year on which the changes come into effect.

These dates are 6 April and 1 October.

What follows is a guide to some of the more important revised and new rules with which businesses must comply as from 1 October 2008. It is not, however, an exhaustive list but an outline summary.

Companies

Directors

The minimum age for a company director is now set at 16 years of age.

A limited company may not act as the sole director of another limited company, although it may do so if there is another director who is a human being.

Share capital reductions

Private limited companies can obtain approval for a reduction in the amount of their share capital without going to court. Instead, shareholders can pass a special resolution enabling the directors to issue a statement of solvency to the effect that the company can pay its debts on time during the forthcoming 12 months. Public companies, however, must continue to use a court order to gain approval of a reduction of share capital.

Trading disclosures

The rules governing the information that companies must include on letterheads, stationery, signs, premises and websites have been unified.

A new rule means that a company must respond within five days to any written request from someone with whom the business deals for the address of the registered office or other place where the person can inspect the company’s records.

Should the name of a director appear on a letter, apart from as a signatory or as part of the text of the letter, then the names of all the other directors must also appear.

The company name must appear on all business letters, publications and websites.

The company’s registered number and the address of its registered office must be displayed on all its paper and electronic documents, including invoices, order forms, emails and websites.

The company’s registered name must also be displayed prominently at its registered office and other premises where it runs its business. In the case of premises that are shared with six or more other companies, a company name can be shown on an electronic noticeboard as long as the name can be seen for a minimum of 15 continuous seconds every three minutes.

Shareholder information

The annual returns of private companies made up to or after 1 October 2008 need only include the names, but not the addresses, of shareholders.

Company names

Businesses that discover that their trading names or trade marks have been registered at Companies House by someone else attempting to gain opportunistically from doing so can now challenge for ownership of the name at the Company Names Tribunal.

Limited Liability Partnerships

New regulations mean that Limited Liability Partnerships (LLPs) are now subject to the same rules governing the content and form of accounts and the responsibilities of auditors that apply to companies.

There are two distinct sets of regulations. One covers small LLPs, which are defined by at least two of three criteria: those that employ fewer than 50 employees; that have an annual turnover of less than £6.5 million; and that have a balance sheet of less than £3.26 million. The other covers medium-sized and large LLPs. Medium-sized LLPs are defined by at least two of three criteria: those that employ fewer than 250 employees; that have an annual turnover of less than £25.9 million; and that have a balance sheet of less than £12.9 million.

Employment

National Minimum Wage

As from 1 October, the minimum hourly rate for adult workers aged 22 and above rises from £5.52 to £5.73. For workers aged 18 to 21, it rises from £4.60 per hour to £4.77 per hour. For workers aged 16 to 17, it increases from £3.40 per hour to £3.53 per hour.

As well as full-time, permanent staff, workers who are eligible for the national minimum wage include homeworkers, part-time workers, casual workers, agency workers and people on short-term contracts.

Employers who provide a worker with living accommodation can offset £4.46 a day from the national minimum wage for each day that the accommodation is provided.

Occupational pension schemes

There is new guidance on how to calculate the cash value of an employee’s pension when that employee moves from one occupational pension scheme to another scheme.

Maternity leave

An amendment to the Sex Discrimination Act means that, in the case of births due on or after 5 October 2008, employers must provide all the non-cash benefits – except wages or salary – to which an employee is contractually entitled for the full duration of her maternity leave period, and not just for the first 26 weeks. That is, for both the duration of ordinary maternity leave and additional maternity leave.

Employers' liability compulsory insurance

Although firms are still required to display copies of their employers' liability compulsory insurance certificates at the place of business, they can now do so electronically provided employees have reasonable access to them.

Consumers’ rights

Doorstep selling

As from 1 October, the rights of consumers to a cooling off period in the case of purchases made at their home or at their place of work or away from the trader’s business premises are extended to cover both unsolicited and solicited sales visits.

All traders who sell away from their premises must now provide customers with terms and conditions that include: a minimum cooling off period of seven calendar days; the right to cancel within those seven days a contract or purchase agreement with a total payment value of £35; and cancellation rights clearly and prominently displayed in any written contract, or provided in writing if there is no written contract.

The rules apply to door-to-door sales and cover such trades and products, among others, as plumbers, builders, glaziers, repair and maintenance services and home ware.

If you have any questions about the new or altered rules, please don’t hesitate to contact us for professional and expert advice.

Date:30 September 2008