A range of areas are covered in the act, including company filing and accounts, late payment, access to finance and insolvency procedures.
The move has been a long time coming for SMEs as previous systems and red tape have been unhelpful for businesses wishing to secure funding and have support within the local and national economy. As part of the act, banks that have rejected businesses will now have to provide details of alternative lending platforms to ensure there SMEs have access to finance.
The act will also be combating late payment, something which can cripple small businesses that rely on large organisations to pay on time. Large companies will now have to review their payment procedures twice a year and report on their findings. This transparency will hopefully prevent businesses paying SMEs too late.
John Allan, the national chairman of Federation of Small Businesses, said “For the first time, an important piece of legislation has been devoted to small businesses. This underlines the huge economic contribution small firms make to the UK economy and recognises their distinct needs.”
Here is a brief look at the Small Business, Enterprise and Employment Act, which consists of 12 parts:
- Access to Finance (includes disclosure of payment practices and systems, VAT information sharing, access to alternative finance)
- Regulatory Reform (includes published recommendations from the Competition and Markets Authority, due attention to small and micro businesses, exclusion of home businesses from Landlord and Tenant Act 1954, streamlined company registration)
- Public Sector Procurement (investigating regulations)
- Pubs Code and Adjudicator (includes overhaul of the pub tie system, investigations and reports)
- Childcare and Schools (includes funding for early years childcare)
- Education Evaluation
- Companies: Transparency (directors’ duties, abolition of share warrants to bearer, register of people with control of the business)
- Company Filing (confirmation statements instead of annual returns, more information on the register, change to director disputes)
- Directors’ Disqualification (New regulations and amendments to disqualification across UK)
- Insolvency (includes more power for administrators to claim on directors’ fraudulent actions, end of obligation to hold creditors meetings – individual and company, change in sales to connected parties, creditors no longer required to claim for small debts, improved regulation of insolvency practitioners)
- Employment (includes equal pay transparency, company penalties for not paying claim after employment tribunals, penalties for not paying national minimum wage, clearer zero hour contracts allowing workers to find additional employment)
- General (amendments and reviews of the act)
You can visit the government legislation website for a complete version of the act.