Proposals to simplify company filings
Author: Sian Sadler and Emma Livesey
On 21 April, the Government issued its response to the consultation on company filings launched in October last year. The response outlines plans to introduce measures which will reduce administrative burden, promote transparency and simplify procedure.
The plans include:
- removal of the requirement to complete an annual return: instead, companies will be required to 'check', notify changes if necessary and confirm information at least once in a 12 month period. Companies will have the option, when making a statutory update following an event such as a change in a director's details, to check and confirm all other information at that point, following which there will be no requirement to check and confirm for another 12 months. This will remove the duplication under the existing system which requires companies to submit information both as it occurs and on an annual basis, although Companies will still be required to pay an annual fee. Companies who wish to continue to use a fixed annual date to check and confirm their information can continue to do so
- allowing companies to opt out of keeping certain statutory registers: under the proposals, private companies will be permitted to opt out of keeping their own register of members, directors, directors' residential addresses, secretaries and the proposed new register of beneficial interests (see Revealing all: the Government's response to ownership and control of UK companies). Where they opt out, the information held in these registers need only be maintained at Companies House. However, it will mean that certain information will become publicly available, such as directors full dates of birth (see below)
- suppression of directors' full dates of birth from the public record: in a move designed to help prevent identity theft, and where the company has not opted out of the requirement to keep a register of directors, only the month and year of its directors birth will be shown on the public record
- simplification of statements of capital: companies will no longer be required to list the amounts paid and unpaid on each share in statements of capital. This will be replaced with a requirement to state the aggregate amount unpaid on the shares
- identifying subsidiaries: in order to increase transparency of group structures, companies will be required to provide details of their subsidiaries within, or as notes to, the accounts
- introduction of statement of truth for appointments: the forms for appointment of a director will no longer contain a 'consent to act' requirement. When a company notifies Companies House of a new appointment it will include a 'statement of truth' to confirm that the director has consented to their appointment. Making a false statement will be a criminal offence. For electronic notifications, this will avoid the need to supply personal information in the place of a signature, which is open to potential abuse. Companies House will write to the new director to confirm that their appointment has been recorded on the public register and if the director has not consented, he or she can apply for removal of the appointment
- accelerating the strike-off process: for voluntary strike-off, the process will be reduced from 3-4 months to approximately 2 months. For compulsory strike-off, the process will be 3 ½ months (from 5-6 months)
Whilst not mandating the use of the Companies House and HM Revenue & Customs (HMRC) joint filing tool, the Government has pledged to ensure that systems are in place to enable those companies that wish to do so, to be able to enter data once to satisfy both Companies House and HMRC requirements.
As yet, there is no definite time frame for introduction of the proposals. The Government has said that it intends to bring forward legislation to implement its proposals as and when Parliamentary time allows.
However, the changes will be welcomed by many businesses, particularly those whose statutory details remain relatively static. Those companies who are able to take advantage of the proposed simplification of accounts and annual filing requirements will mean they may need to interact with Companies House only once in any given year.
To read the full Government response, see https://www.gov.uk/government/consultations/company-filing-requirements. The proposed changes are are closely linked to additional reforms relating to Transparency and Trust, including the introduction of a public register of beneficial interests. For further details on those reforms, see Revealing all: the Government's response to ownership and control of UK companies.