Red Tape Challenge to company law
Author: Chistopher Garnett
A total of 120 pieces of legislation are under the spotlight as the Government focuses its Red Tape Challenge on company law
In April 2011, the Government launched its two year Red Tape Challenge to target unnecessary regulatory burdens.
Company law is part of the challenge, and on 26 January 2012, the Government announced a focus on company law for the three week period to 16 February 2012.
While the regulations can be commented on at any time during the two year period up to April 2013, in the current three week period the Government is turning the spotlight on how it can reduce the administrative burden of company law, while continuing to provide adequate protection for creditors, customers and suppliers.
The campaign asks for suggestions about how regulations can be improved, simplified or abolished. The results of the review will be published later this year.
The Red Tape Challenge comes just years after the wholesale revamping of company law, which resulted in the Companies Act 2006.
Examples of areas open to comment include:
- internal workings of companies and partnerships - rules on shares and share capital, requirement to hold information at business premises and rules on meetings and resolutions
- accounts and returns - the content, form and auditing requirements of financial accounts and other reports
- disclosure of company information - the regulations covering the information companies must supply to the official register
To accompany the challenge, the Department for Business Innovation & Skills has published a discussion paper called Providing a flexible framework which allows companies to compete and grow.
It notes that work is already under way to consider improvements to the areas of exemption from mandatory audit, partial exemption from micro entities under the EU accounting directives, changes to narrative reporting requirements and law relating to company charges.
The paper then invites views on how company law can be improved in all areas. A few of the areas of law under consideration are:
- company names - there is a possibility that the number of sensitive words and phrases that require approval before including them in a company's registered name might be reduced
- company filings - there may be scope to reduce the number or complexity of filings a company has to make, particularly if there is little change from year to year, and it may be that steps are taken to reduce multiple filings of the same information with different government agencies
- employee share schemes - it may be that the design and operation of company share ownership schemes can be simplified
The dedicated website for the Red Tape Challenge where comments can be made is at: www.redtapechallenge.cabinetoffice.gov.uk