Services
People
News and Events
Other
Blogs

Countdown closing in for Companies under New Rules

  • Posted

Countdown closing in for Companies under New Rules The clock is ticking for companies in the final countdown to the new Companies Act, which comes into effect on 1st October 2009 and will affect every company in the UK. This is the final stage of implementation for the 2006 Act, but many companies are still unaware of the impact of the new law, according to local company law specialist, Neil Ashford of Chelmsford based solicitors Gepp & Sons. "In this final changeover period, companies need to make sure they've completed any business with Companies House under the 1985 Act well before the end of September," he explained. "And they need to be ready to use the new system in October. That means being registered and ready to file electronically, as well as understanding the new responsibilities involved." "Once that's sorted, they should be reviewing what might be useful to adopt under the new Act. For example, the simplified articles of association that can now be adopted, which can help to avoid confusion around corporate power." New model forms of constitution allow simplified company articles to include the company's objects, liabilities and assets – all of which were previously in the company memorandum. The new constitution prescribed by the Companies Act will form the basic constitution of all companies formed after 1st October. Existing companies can also adopt the simplified constitution, but will have to hold a shareholders meeting to do so. It's part of a complete overhaul of the company formation and administration process, which is set to be easier and cheaper in future, including increased use of electronic reporting and filing. There are wholly new forms for recording company activity including the annual report, and many of the new forms record different information. Added Neil Ashford: "Any company events which take place before 1st October must be submitted on the old 1985 Act forms. But after that, the new forms must be used for anything that takes place on or after 1st October 2009 - and anyone using the old forms will find they are rejected. "With electronic WebFiling it should be an easy process, with menu screens to guide you through." On the downside, all companies will have one month less to file accounts, with the filing period reduced to nine months for a private company. Penalties for late filing have doubled. Any amendments to the company's articles after 1st October must be sent to Companies House within 15 days, otherwise you could be liable to a criminal offence and a civil penalty of £200. And company records must be up to date and consistent with what is held on public record, so changes must be notified when they happen, not just on the Annual Return. To guard against fraud and company hijacking, Companies House have introduced the PROOF scheme - Protected Online Filing – which protects companies from unauthorised changes to their company details. Under PROOF, companies agree with the Registrar that they will only file certain documents electronically. If a fraudster tries to 'hijack' their company by filing a piece of paper, this will be rejected. Directors' duties and shareholders rights are now set out in statute and companies can indemnify directors. Raising of share capital and takeovers; political donations; and auditor liability are also covered. Other key changes relate to a change in procedure for company registers and confidentiality for directors' home addresses through new disclosure protection. Every director will have a publicly available service address whilst the residential address will only be available to public authorities and credit reference agencies. From 1st October a director's current residential address will automatically become the service address, so companies need to take action to file any requests to use an alternative service address. The changes to the arrangements for inspecting a company's registers now allow for registers to be held either at the registered office address or at a single alternative inspection location – known as a SAIL. Companies House must be notified if you establish a SAIL address or if the SAIL address is moved, and a company can only have one SAIL address at any time. The new legislation also brings together the whole of the UK into a single company registry, with Northern Ireland company registry integrating with Companies House. Checklist: * Get all activity up to 30th September logged on the old forms on time * Start using the new forms for all activity from 1st October * Get registered for online filing with WebFiling * Get registered for PROOF to protect your company from fraud * Get registered with a SAIL address if you want to hold you registers separately from the registered office address * Notify service addresses for directors so home addresses can remain confidential * Ensure you diarise to submit annual returns on the new 9 month deadline * Ensure amendments to articles are notified within 14 days to avoid penalties and criminal action * Review with your adviser whether it would be useful to adopt the new simpler style company articles This is not legal advice; it is intended to provide information of general interest about current legal issues. • For additional information or comment please contact: Neil Ashford of Gepp & Sons.

Comments