The Small Business Act, which received royal assent earlier this year, aims to help UK entrepreneurs, but what does the act mean and how could it make a difference to your company? Here, the IoD’s Information and Advisory Service (IAS) explains
The Small Business, Enterprise and Employment Act came into force at the end of March with the aim of helping Britain’s SMEs grow by improving their access to finance. It also tackles a raft of business issues, including late payments and zero-hours contracts, but how could the legislation help your company?
1. Better access to finance
The act aims to secure better access to finance for small businesses by increasing the availability and sources of investment and removing the legal barriers to invoice finance. It also requires banks to pass on details of companies they reject for loans (with their permission) to online platforms, helping to match them to alternative finance providers. It will also increase transparency on payment practices and policies through the introduction of new reporting requirements on the UK’s largest companies.
2. Regulatory reform
There is now a target for streamlining company registration – the secretary of state must ensure a system is in place by 31 May 2017. There will also be a review of business appeals procedures and the act will improve the scrutiny of complaints handling procedures within the Financial Conduct Authority (FCA), the Prudential Regulation Authority (PRA) and the Bank of England. Statutory definitions for the terms “small business” and “micro business” are also being created.
3. Public sector procurement
The government will be able to implement measures to remove unnecessary barriers for small businesses and make procurement practices across the entire public sector more streamlined. The secretary of state will also have the power to investigate procurement processes and practices.
4. Company transparency
Companies will be required to keep a register of people (a PSC) who have significant control over the organisation. Subject to certain exceptions, it will also no longer be possible for a company to act as a director of a UK-incorporated company.
5. Directors’ disqualification The act will strengthen the rules on director disqualifications to widen the matters of misconduct that courts must take into account when disqualifying, including conduct in overseas companies and measures to help creditors recoup losses resulting from director misconduct.
The insolvency law will be streamlined, allowing greater creditor engagement in the process and encouraging modern communication methods between office holders and creditors.
The act covers a range of employment issues including equal pay, whistleblowing, employment tribunals, exclusivity in zero-hours contracts and public-sector exit payments.
How could the IAS help you?
• The IAS provides IoD members with free business intelligence and advice to help them run their companies more efficiently and successfully.
• The Business Information Service is able to investigate questions on behalf of members and supply them with valuable information ranging from market forecasts and industry trends to trading abroad and employee salaries.
• The Directors’ Advisory Service provides confidential, independent advice from specialists on issues ranging from raising finance to board and shareholders’ disputes.
• Members can receive prompt and confidential business, personal tax and legal advice through using the IoD’s telephone helplines.
To find out more about the Information and Advisory Service, visit
Call the IAS team on 020 7451 3100
Benefits IoD members are entitled to 25 enquiries a year to the Business Information Service, 4 sessions with an IoD adviser, 25 calls to both the legal helpline and the tax helpline