Saffery Champness explains.
As part of the Government’s aims to increase corporate transparency and reduce the use of UK companies for criminal purposes, the Department for Business, Energy and Industrial Strategy has put forward new legislation as part two of the Economic and Corporate Transparency Bill.
The new legislation proposes measures to reform Companies House and give the Registrar of Companies additional powers to maintain the accuracy of the UK’s record of companies.
The proposals are likely to affect the way businesses prepare and file their accounts in future, and particularly the preparation and publication of a directors’ report and profit and loss account for small companies. They also include measures to prevent the abuse of limited partnerships.
Martyn Dobinson, a partner with chartered accountants Saffery Champness and a member of the firm’s land and rural practice group, explained: “The proposed reforms will simplify and streamline the filing obligations for small companies and micro-entities by separating the legal requirements into two distinct sections. The amendments also seek to ensure that key information is retained on the public register. This is an important change as previously directors could opt not to make such information available to the public.
“Small companies will no longer have the option to prepare and file ‘abridged’ or ‘filleted’ accounts. This means they would be required to file accounts that include a profit and loss account and directors’ report. Previously this information would have been prepared by the company but was not required to be filed and was therefore not available to the public.
Where a company is seeking an exemption from the requirement to have accounts audited (for example because it is categorised as a ‘small company’) directors would be required to make a statement confirming that the company qualifies for such an exemption, the aim being to reduce the risk that entities are falsely claiming an audit exemption to which they are not entitled.
“Micro entities will also be required to file their profit and loss account but will continue to have the option not to prepare or file a directors’ report. As with small companies, this information would have been previously prepared by the company but would not have been filed and was therefore not available to the public.”
The bill also aims to tackle the perceived misuse of limited partnerships and modernise the law governing them, by:
- Increasing the registration requirements for new limited partnerships
- Requiring limited partnerships to maintain a connection to the UK
- Increasing the transparency requirements
- Enabling the registrar to deregister limited partnerships in certain circumstances.
Martyn Dobinson went on: “The bill will also introduce new objectives for Companies House to promote and maintain the integrity of the register and give the registrar additional powers to support these objectives through a range of new measures. These will include the power to reject documents that contain inconsistencies or appear incomplete and, where this happens, they will be considered not to have been delivered. It’s also proposed to introduce changes to how accounts are submitted electronically in the future.”
Before it becomes law, the bill is still subject to amendment during the Parliamentary review process. The bill is currently at the committee stage in the House of Lords.
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