Companies Act 2006
The companies act 2006 contains important changes for business owners and accountants dealing with legal and accounting issues for tax and accounting purposes.
The act received Royal Assent on 8th November 2006 and consists of 1300 sections and is the single largest piece of legislation ever made.
The Act will effectively replace existing companies legislation with the exception of provisions relating to company investigations and community interest companies. All parts of the Act will come into force by October 2009, but there will be early commencement of some of the provisions
Secretary of State of the Department of Trade and Industry, Alistair Darling also said that these changes introduced into the Act will bring £250 million of savings annually for businesses including £100 million for the small businesses
Companies Act - Main Changes
- Codification of directors’ duties, including a new duty to promote the success of the company
- Giving all directors an option to file service addresses on the public record rather then private residential addresses
- Promoting shareholders’ engagement and a long-term investment culture through enhancing the power of proxies and enfranchising indirect investors
- Simplifying and de-regulating the legal requirements for running private companies through measures such as simplification of capital maintenance provisions, abolishing of the prohibition on financial assistance for private companies purchasing their own shares, etc.
- Extending rights of shareholders to sue directors for negligence and other defaults and rights to bring derivative claims on behalf of the company in certain circumstances
- Prescribing a new criminal offence of recklessly or knowingly including misleading, false or deceptive details in audit reports
- Introducing measures to allow companies to limit the liability of their auditors
- Simplifying the company formation process including abolishing the requirement for authorised share capital
- Facilitating e-communications
- Making it easier for company law to be updated in the future
Private Companies Changes
- New Model Articles for private companies - separate sets of model articles for private and public companies limited by shares will be provided. In addition, for the first time, there will be a separate set of model articles for companies limited by guarantee.
- A private company will no longer be required to have a company secretary
- Simplified decision- making process - The decision-making process of the private companies will be simplified by removing the statutory requirement of holding AGM and making it easier to take decisions by written resolutions.
- Simplifying capital maintenance provisions through abolishing prohibition on financial assistance for private companies purchasing their own shares and introducing a simpler mechanism for capital reductions.
Late Filing Penalties
Section 441 of the Companies Act 2006 requires all companies to deliver annual accounts to the Registrar of Companies by the due date. Section 453 specifies that a civil administration penalty shall be payable if the accounts are delivered late, and provides for the Secretary of State to specify the level of this penalty through regulations.
To increase the effectiveness of the late filing penalties, when section 453 comes into force Companies House will change the current schedule of late filing penalties as contained in section 242A of the Companies Act 1985. In parallel, the Government will amend section 242A of the 1985 Act so that these changes also apply to accounts prepared under the 1985 Act but delivered late on or after 1st February 2009 when the updated penalties come into force.
What are late filing penalties?
Late filing penalties were introduced in 1992 to encourage directors of limited companies to file their accounts on time because they must provide this statutory information for the public record.
What are the changes being introduced?
- All penalties to be increased to take account of inflation between 1992 and 2007
- A faster rate of increase in penalties for companies who file more than one month late.
- A doubling of the penalty for any company which files late having also filed late in the previous year.
What are the new late filing penalties?
The new table of penalties is a follows:
*
| How late are the accounts delivered | Penalty – Private Company |
Penalty - PLC |
|---|---|---|
| Not more than one month | £ 150 | £750 |
| More than one month but not more than three months | £375 | £1500 |
| More than three months but not more than six months | £750 | £3000 |
| More than six months | £1500 | £7500 |
In addition where there was a failure to comply with filing requirements in relation to the previous financial year (and that the previous financial year had begun on or after 6th April 2008), the penalty will be double that shown in the table.
When do these new penalties apply?
The new penalties will apply from 1st February 2009.
How will I know when a penalty is levied?
If accounts are delivered late, an invoice is issued automatically to your registered office address.
Do the penalties apply to flat management and dormant companies?
Yes
How can I avoid penalties?
Read the filing reminders that Companies House send to your registered office address.
Allow enough time to ensure that your accounts reach the Registrar within the period allowed in the Companies Act. First-class post is not guaranteed so if the filing deadline is looming, then please consider guaranteed methods of delivery that will ensure that your accounts arrive on time. Remember: the Registrar will not waive a penalty if your accounts are delayed in the post.
You can now file certain categories of accounts using our Software Filing or WebFiling services using the Companies House website. If you file your accounts electronically you will benefit from an email acknowledging receipt of your accounts.
What will happen if the penalty is not paid?
The penalty will be referred to collection agents. If it remains unpaid, legal action may be taken which could result in a County Court judgement or a Sheriff Court decree against your company.
Did the Late Filing Penalty changes go for public consultation?
Yes the original proposals went for public consultation on 20th July 2007, and all responses were required by 12th October 2007
Where can I find a copy of the consultation document and the response?
The consultation document and the response are both available on the publications pages of the Companies House website at:
http://www.companieshouse.gov.uk/companiesAct/publications.shtml
Copies of the regulations are available on the OPSI website at:
http://www.opsi.gov.uk/si/si2008/draft/ukdsi_9780110806181_en_1
Do late filing penalties apply to any other documents?
Where a company amends its articles of association, a copy of the amended articles must be sent to Companies House within 15 days. Failure to comply is a criminal offence.
The Companies Act 2006 introduces a new civil penalty of £200 for failure to comply. The penalty will only trigger if a company receives notice from the Registrar requiring it to deliver a copy of its amended articles and it does not comply within 28 days.
The company would remain liable to criminal proceedings in addition to the £200 civil penalty.
