A number of significant reforms to company law are to be implemented as part of the government’s response to the consultation on Corporate Transparency and Register Reform.
All directors and Persons of Significant Control (PSCs) will need to be identified, along with anyone filing documents at Companies House for a company (only AML regulated bodies referred to as “Properly Supervised” agents will be eligible to file). Agents filing for a company will need to evidence verification of directors and PSCs to Companies House to avoid duplication with Companies House verification systems.
Unverified appointees may face action, potentially including prosecution. Shareholders will not have their identities verified as this was deemed impractical, and this would certainly be understandable in the case of a large or highly active shareholder base. It is to be hoped that this decision will be implemented by Companies House to disclose identification of an agent on each document filed. Currently, it is impossible to identify who has filed any electronic document.
The consultation found that disclosure of a director’s occupation was thought to be of little value and in future will not be requested (it is already discretionary when appointing a director). Currently disclosed occupations will be suppressed on application. Days of birth of directors disclosed before 2015 may also be suppressed on application.
Suppression of signatures will be possible. The concern here would be that currently most shareholder resolutions are filed by paper, and the signatures are evidence that the resolution has been passed by the requisite majority. If signatures are suppressed, and until such time as all resolutions are filed electronically, there will need to be some system in place which certifies that the resolution was passed.
It was discussed whether a person changing their gender should be able to suppress a previously used name. It was concluded that this issue required further discussion.
Enforcement and new powers for Companies House
The accounting reference date (ARD) rules are to be revised to avoid abuse. Currently, it is possible to shorten the ARD by one day to gain three months extra to file accounts, and this can be done several times in one period. To prevent this, a company will only be able to shorten their ARD once every five years, in line with the current rules on extending the date.
The exemption allowing a company to extend its ARD more than once in a five year period to bring its date in line with a group will continue, and be extended to shortening a date as well. However, Companies House will in future be looking for evidence that a company is part of a group which is already using the proposed ARD before allowing a lengthening or shortening of the date.
Where micro or dormant accounts are filed for a company, Companies House will, in future, be running checks on the size of the company to ensure that it is eligible. There will also be powers for Companies House to cross-reference its own data to that of other bodies (for example, HMRC) under AML regulations and report discrepancies.
Companies House will have increased powers to query information received from companies, including proposed company names. Currently, it will generally only reject information which is clearly incomplete or does not provide the information requested.
The government is concerned about potential misuse of “certificates “of good standing” issued by Companies House (currently, a certificate will always be issued so long as a company’s accounts and confirmation statement filings are up to date). Although it plans to maintain this service, in future certificates will not be issued automatically and the information they provide is expected to change.
Company records will be retained at Companies House for 20 years after dissolution (currently it is six). From 2021, all dissolved company records back to 2010 will become available, and from then on all records will be available for 20 years after dissolution.
Currently, it is not possible for a Limited Partnership to be struck off the register, so the government will legislate to allow Limited Partnerships to be struck off following a court order. A parallel ‘voluntary strike-off’ procedure will also be implemented.
Finally, although there is public support for the adoption of iXBRL tagging for company accounts and the government says it plans to adopt best practice for tagging, no specific timeline is given in the response for moving to “full tagging”.
While the government will need to continue to consult on legislating these reforms, some practical changes to Companies House procedure will not need to be legislated, so testing new procedure is expected to start in spring 2021.
For help and advice on any Companies house issue please contact [email protected].uk .
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