Are you a director of multiple companies?

Companies House Reforms

Are you a director of multiple companies?

Read about Companies House reforms – the most significant changes in over 170 years!

The government has been consulting on some ambitious changes to Companies House, the UK’s registrar of companies, in a bid to increase corporate transparency and help to combat economic crime.

Some of these proposals are significant, so directors of all businesses ought to be aware of them. If you’d rather not read the 80-page consultation, the key issues are:

Directorship caps

The government is considering whether there is any merit in restricting the number of directorships a person can hold concurrently. No guidance has been issued on what that number might be, but clearly an individual with five directorships is at far less risk than someone with, say, 150.

Non-UK bank accounts

Businesses opening non-UK bank accounts may be required to notify Companies House within 14 days, in an effort to tackle money-laundering. Full bank information will not be publicly available.

Identity checks

Identity verification may be imposed for all individuals with key roles in companies and LLPs, and the government is considering whether this should be undertaken by third parties. Where an identity cannot be verified, the appointment of a director may not be accepted by Companies House. More extensive checks are anticipated for the incorporation of an entity.

Shortening year-ends

By shortening an entity’s year-end by one day, the deadline to file accounts is extended by three months from the date on which this notice is given to Companies House.

Originally introduced in good faith to prevent businesses filing their accounts late where an accounting period is legitimately shortened, Companies House has noticed that this is now being abused; some are using it multiple times as a mechanism to avoid late-filing penalties where accounts will not be ready by the normal filing deadline.

It seems that a limit may be imposed on the number of times a company may shorten its accounting reference period.

Power house

Companies House is expected to gain more powers, by reviewing and rejecting information before it is filed, rather than processing data and then dealing with errors, once notified, at a much later date.

Time to act?

Given that the proposals affect the powers of Companies House, changes will be enacted via primary legislation, and therefore transformation is likely to be many years away.

Should you wish to review the full consultation, it can be found here. We will continue to keep you updated on any developments; however, if you have any concerns in the meantime, please call your usual Creaseys contact on 01892 546 546.