The Lifecycle of a Business - Registers, Records and Filings
Setting up and running your own business is an amazing achievement. It requires vision, creativity, motivation and stamina.
On occasion, it can even bring you fame, riches and fortune. But it can also result in reams of paperwork and cause sleepless nights. And as someone once said to me about children “It doesn’t get easier, it just changes”, so the same can be said for your business throughout its lifecycle. From setting up to exit, it will force you to consider issues that you might not previously have known anything about and it will need you to make many decisions, sometimes very quickly. What it certainly is not is mundane.
With this in mind, the corporate team at Forsters, together with some of our specialist colleagues, has written a series of articles about the various issues and some of the key points that it may help you to know about at each stage of a business’s life. Not all of these will be relevant to you or your business endeavours, but we hope that you will find at least some of these guides interesting and useful, whether you just have the glimmer of an idea, are a start-up, a well-established enterprise or are considering your exit options. Do feel free to drop us a line or pick up the phone if you would like to discuss any of the issues raised further.
So, First Things First…..
Registers, Records and Filings
Depending on the type of entity that you’ve set up (for further information about the different options available in England and Wales, see here), you will need to make certain filings and maintain various records throughout the entity’s life. In this article, we focus on the principal corporate records and filings relevant to a private limited company incorporated in England and Wales. Bear in mind that other registrations and filings will or may be needed too, for example, with HM Revenue & Customs for tax purposes and HM Land Registry if property is held, but these are outside the scope of this note. Overseas entities may also be required to be listed on certain registers in the UK (the most notable currently being the Register of Overseas Entities if they own UK real estate) but again, this is outside the scope of this article.
The main corporate registers and records that are relevant for private limited companies incorporated in England and Wales fall within two categories – those maintained by Companies House and those maintained by the company itself.
Companies House
Companies House is the government body responsible for incorporating and dissolving companies in England and Wales, as well as for collating the various filings required by such companies and making the information available to the public. It also deals with the incorporation of limited liability partnerships (“LLPs”) and the filings required by LLPs and limited partnerships.
Searches of entities on the Companies House register can be made free of charge and certain information can be obtained within seconds, while some historical information can be obtained for a small fee. Companies House can be an incredibly useful source of information, although it must be considered that, unlike the Land Registry, it does not guarantee the accuracy of its contents, and not all of the information obtained from its registers will be up-to-date. For example, details of any share transfers will only appear on the public register when the next confirmation statement is filed – so the record could be a year out of date.
Companies House registers
Central public register
Companies House maintains a central public register of all companies incorporated in England and Wales. Incorporation of a company cannot take place without Companies House’s involvement and it is only when you have submitted an application for registration (on Companies Form IN01 ) to them, have paid the appropriate fee and they have provided you with a certificate of incorporation that your company will be in existence. This can be done on a same day basis, and in any case usually within a day or so.
Once incorporated, your company will be listed on the central public register at Companies House and searches can be made against it in respect of certain information – its registered office, names of directors and annual accounts, for example.
PSC register
A company is required to maintain a PSC (people with significant control) register and also to file the information publicly at Companies House.
Essentially, the PSC register is a record of the beneficial owners of the company. For more information about PSCs, see here.
It is important to bear in mind that a company’s PSC register must never be blank. If the company has no PSCs, it must make a statement to that effect. If a company is unable to complete the PSC register, official wording must be included depending on whether the company is still investigating whether it has any PSCs or knows it has a PSC and is trying to confirm their details.
If any details change about a company’s PSCs, the company has 14 days to update its own register and a further 14 days after that to update Companies House.
Companies House filings
Companies House filings are made using specified forms – for example, an appointment of a director is form AP01, a change of details is form CH01. The gov.uk website can be helpful if you are in doubt and of course, your legal or accountancy advisors will also be able to assist.
Most forms can be filed online, and this is always faster. Paper forms can still be used, but inevitably many are rejected for minor errors that are impossible with online filing (typos in the company name or number being the main culprit).
Certain filings, such as a change of company name, may incur a fee. While fees are small, the filing will not be processed unless it is paid.
Event-specific filings
Certain events during a company’s life will require filings to be made at Companies House so that the public register can be updated. This includes (among other matters) changes to the company’s officers, its constitutional documents, its share capital, and basic details such as address, principal activity or financial year end. The deadlines for making such notifications vary and so you should make sure that you are aware of, and comply with, the various time periods. Filings should be made as soon as possible (preferably immediately) after the change is effected to avoid any risk of missing the filing deadline.
Most filings are only notifications of events that have already taken place, but certain changes only take effect upon filing. For example, if a company wishes to change its name and passes a resolution accordingly, Companies House will need to check that the name is not the same as one already on the register and that it otherwise complies with the regulations. Only once it has done this will it issue a new certificate of incorporation on change of name. A change of the company’s registered office will also only take effect once the register has been updated.
Annual filings
Each year, a company must file a confirmation statement with Companies House which either confirms that all required changes have been filed or sets out any changes which have taken place since the last confirmation statement date.
Every company must also file annual accounts, whether or not the company has been active.
Company registers
The company is also required to maintain its own registers at its registered office, the majority of which must be available for public inspection. Such registers include (most importantly) the register of members, the PSC register, a register of directors (and company secretaries, if applicable), a register of the directors’ residential addresses (which remains private and is not available for public inspection) and a register of charges (if created before 6 April 2013).
The register of members is a crucial document as it provides key evidence as to who are the shareholders of the company. It is therefore extremely important that it is kept up-to-date. For private companies, this is not usually an onerous process as the shareholders are unlikely to change on a regular basis, but this does not mean that it can be ignored and company’s officers should not be blasé about its maintenance.
Copies of the directors’ service contracts, a record of resolutions and shareholder meetings and adequate accounting records must also be kept.
A company may also choose to maintain a register of applications and allotments, a register of transfers and/or a register of debenture holders, although these are not required by law.
There is an option for private companies to elect for the information contained in some of the above registers (the register of members, the register of directors, the register of directors’ residential addresses, the register of company secretaries and the PSC register) to instead only be available on the central public register maintained by Companies House, thereby avoiding the need to keep their own separate registers. However, few companies have chosen to use this system as it puts more information about the company’s shareholders into the public domain.
Failure to comply
A failure to comply with any of the various record and filing requirements, will constitute a criminal offence by the company, its directors or both, although prosecutions are rare. If a company fails to file its annual accounts, it will also be warned and eventually struck off the register and dissolved.
In addition, it is an offence for any person knowingly or recklessly either to deliver a document to Companies House or cause one to be delivered or to make a statement to Companies House that is misleading, false or deceptive in a material particular.
As such, to the extent that you are unclear as to any of these obligations, taking advice from your legal or accountancy advisors is recommended. The gov.uk website also provides guidance.
The future?
The Economic Crime and Corporate Transparency Bill (the “Bill”) is currently wending its way through Parliament. As currently drafted, the Bill could have quite a significant impact on Companies House processes and powers. It proposes requiring all directors and PSCs to have their identity verified before they can be appointed as such and also gives Companies House more power to decline and query information provided to it for inclusion on the register.
How far Companies House will take these powers remains to be seen although there has been some suggestion that it does not currently have sufficient resources to enforce the new powers as meticulously as the Bill permits and that it may be some time before we actually see an upsurge in investigative activity.
Disclaimer
This note reflects the law as at 2 August 2023. The circumstances of each case vary and this note should not be relied upon in place of specific legal advice.