22 August 2016 by Lorraine Young
Some welcome and some unexpected changes in company filing requirements
With more of the changes from the Small Business, Enterprise and Employment Act 2015 (SBEE Act) coming into force from 30 June, there have been some key changes in filing requirements – some of which have been unexpected.
The confirmation statement has now replaced the annual return − this is by far the biggest change. The idea behind the new procedure is that companies check certain information that is held at Companies House at least once a year and either confirm it is correct or advise of any changes. A filing fee (£13 for electronic filing or £40 if filing on paper) is payable once a year, regardless of how many confirmations the company makes during the year.
The details about the registered office and location of registers and directors have to be checked. If these have changed then the relevant form has to be filed first to notify the change, before the CS01 can be submitted.
Changes to shareholder information, statement of capital and SIC (standard industry classification) code can be notified on the CS01 form. If there are no changes, the details do not have to be resubmitted – i.e. a full statement of capital only has to be filed with the CS01 if the share capital has changed during the year.
The best way to file the CS01 is online − if you view the pdf of the paper form the majority of the pages are for information about people with significant control (PSCs), and there are 62 pages excluding a two-page ‘front sheet’ which gives the date, signature and presenter information. This is the first time that PSC details will be captured on the public record.
Since many of the form details were published close to the implementation date, some software packages may not allow electronic filing of the CS01 yet, in which case WebFiling has to be used. This involves re-inputting all the PSC information from the register − which does not feel much like de-regulation.
Companies House will send a reminder by email or letter when the confirmation statement is due. This will either be 12 months after a company was incorporated or 12 months from the last annual return/confirmation statement.
It is important to note that the filing deadline is now 14 days, not 28 days as before. With the new PSC information to add, this much shorter timeframe has not been helpful. It is to be hoped it will not be too rigidly enforced while the new system settles in.
There are minor changes to the IN01 form (used to form a new company). A SIC code now has to be included, as does the PSC information.
There are new rules on the statement of capital – at last the glitch which arrived in 2009 with the final phase of the implementation of Companies Act 2006 (CA 2006) has been fixed and there is no longer any need to list all the issue prices of shares with the amounts paid and unpaid on each. This is a welcome simplification and should shorten the disclosures required. The new requirement is to show the total amount unpaid on the issued share capital.
This change affects several forms and a perusal of the Companies House website shows that many forms have been updated. If you send in an old version it is likely to be returned, so it is worth making sure you are using the correct one.
When CA 2006 was phased in, the changes to the use of forms seemed logical. For events which happened before the changeover date, you used the old form but for events which happened after the changeover date you used the new form. This time, Companies House have been rejecting old style forms filed after 30 June, even if the event occurred before that date.
Whether this is intentional or not is not clear at the time of writing. Strangely, we came across a webpage with a form on it described as an AR01 2015 which states it is valid from 30 June 2016. The form is a pdf of the old style form. Perhaps the description should read ‘it is valid until 30 June 2016’.
We have known about this for a while and hopefully company secretaries will be ahead of the game and have this in hand. We suspect, however, that there are still many companies (probably the ones without company secretaries) who have not got off the starting blocks. Of course, sometimes the process will take a while.
Companies House reminds us that it is a criminal offence not to provide the PSC information and that there are forms to file if a company does not have a PSC or if it is still trying to identify one. There are nine different forms relating to PSCs.
Companies can now keep certain registers on the public register, rather than holding their own copies at the registered office or single alternative inspection location (SAIL). This can be done for the following registers: members, directors, secretaries, directors’ residential addresses and PSCs.
Many small private companies are likely to be incorporated through the inexpensive online service and never actually have any statutory books, so removing the requirement to hold them also removes a large amount of non-compliance. This would not be the case where the companies have competent professional advisers.
For small companies, as there is often no visibility of the rules being enforced, there is no motivation to follow them. However, if the information is suddenly needed, for example when the business owner wishes to pursue an exit route and sell their company, then problems are encountered and fees incurred to sort out the muddle. I am sure many professionals have had to do some ‘forensic work’ to try to produce a decent set of records from very little or even no information.
There are reasons against holding these registers on the public record – including that there may be information which individuals might prefer to keep private, such as their residential address or date of birth, which would be placed on the public register if the statutory books are held at Companies House.
You can opt in and out of holding registers at Companies House. There are a raft of new forms to submit to opt in (designated EH01 to EH05) or out (designated EW01 to EW05) for each kind of register and one to update details on the register of members (EH06). Companies can opt in on incorporation or at a later date, but in either case all members must agree to the election.
If an existing company opts in, then it must continue to retain the historic register, although this does not have to be updated while an election for the register to be held at Companies House is in place.
When any election is withdrawn and a company decides to hold the registers itself again, the information which was on the public register (including full date of birth and registered addresses) stays there, it is not removed.
Companies House has published a comprehensive guide to this new regime (which is only available to private companies) and it can be found on its website. It does state that ‘This guide isn’t drafted with unusual or complex transactions in mind. Specialist professional advice may be needed in those circumstances.’
To end on some good news, the following fee changes came into force on 30 June 2016.