The Department for Business, Innovation & Skills (BIS) has recently carried out a consultation on company filing obligations.  In particular, in respect of private companies it is looking at:

  • Annual filings
  • Transparency
  • Communications
  • Resolving problems

BIS is asking whether the regulations relating to filings should be (a) scrapped, (b) amended or (c) left alone. It acknowledges that the burden of filing, particularly for small companies, can be very onerous, but there has to be a balance between keeping the register at Companies House up to date and accurate and reducing the "red tape" for companies. Some of the proposals are likely to make things more difficult for people searching at Companies House for information on companies - such as the proposal that statements of capital on an allotment of shares be dealt with merely by way of a statement in the articles of association, and the proposed removal of some or all of the information on dates of birth of directors. Other proposals, such as transparency regarding the beneficial owners of private companies may well help searchers for information (and HMRC).

One of the more interesting issues addressed are the proposals on transparency. BIS posed the question of whether limited companies should continue to be required to maintain up to date company registers (open to inspection by certain third parties) in addition to their filings at Companies House. It also asked for input on the subjects of:

  • the provision of directors' dates of birth (in the light of evidence that dates of birth are frequently used in identity theft);
  • statements of capital;
  • the beneficial ownership of shares (a very contentious subject); and
  • the reporting of subsidiaries. 

BIS is keen to ensure that the records held at Companies House should be as transparent (and accurate) as possible. However, some consider that the additional transparency and, in particular, the obligation for companies to reveal their beneficial owners (going as far "up the line" as is necessary to reveal the identities of the beneficial owners) is a step too far and could adversely impact on the UK's ranking as a premier financial centre. Many companies have legitimate reasons for cloaking the identities of their beneficial owners, but it is also true to say that the difficulties in identifying who actually owns what is increasingly proving a great headache for the law enforcement agencies in this country, particularly in the fight against terrorist organisations. 

All the proposals are designed to make life easier for private companies and to introduce a novel consistency within the legislation, but the question remains: who will benefit most? Many private companies already fail to keep their statutory registers up to date and sometimes the information held at Companies House and available to the public is more up to date than the actual registers held by a company. If their obligations are reduced by removing, for example, the requirement to keep the register of members up to date, how will one be able to find out, definitively, who owns the share capital of a company and when they became shareholders? The Government proposes that the Companies Act 2006 be amended to define exactly when legal ownership of shares becomes effective instead of the old obligation that amending the register of members gave definitive proof of ownership, but we fear that in many instances there may well still be a lacuna and that the proposed changes need to be thought out a little more carefully. 

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.