Companies House – Information is Power
Date: 25/11/2020 | Corporate
The Government’s recent response to the consultation on options to enhance the role of Companies House and increase the transparency of UK corporate entities focused on a plan to reform the powers Companies House has in regard to the information filed on the register.
The Government plans to introduce statutory powers which will allow Companies House to query and check information before it is placed on the register. Also, the Registrar will no longer be obliged to accept any application to register a company that has been validly submitted. The Government will also extend the Registrar’s current limited powers to amend information already on the register.
Currently, Companies House has limited powers to check and query information before it is placed on the register which has resulted in the information on the public record often turning out to be inaccurate, inconsistent and in some instances confusing.
One of the advantages of the Companies House online web filing system is its speed. On the other hand, one of the main disadvantages is the ease with which inaccurate information can be filed.
One of the biggest offenders for this is the confirmation statement which often does not accurately reflect the structure of a company. Every company on the register must file a confirmation statement every year and more often than not they note (or should note) that there are no changes from the previous year. Whether due to human error or a lack of understanding, it is all too common to find mistakes. For example, in the case of a wholly owned subsidiary it is not uncommon for the filings to reflect the shareholdings in the parent company which is simply incorrect. Under the new system these will be checked before they are filed avoiding incorrect information appearing on the register.
Another common error is found in the registers of People with Significant Control (PSCs). The PSC rules and guidance are long-winded and complicated and not helped by the variety of tests that a person or entity can meet to be considered a PSC, whether it be by holding shares, votes or significant control and there is always the added difficulty that not all entities can be registered as PSCs (overseas companies, limited partnerships etc.). If you are not familiar with the rules, then it is easy to see why the wrong people and entities are placed on the register. Companies House has already introduced reform to tackle this issue and has created a new dedicated team who are currently reviewing the companies on the register to highlight inconsistencies and to contact companies to correct these issues.
There is also some good news for directors. Not only are the Government proceeding with the proposal to remove the ‘occupation’ of a director (which more often than not does not serve a meaningful purpose) they are also proceeding with the proposal to allow officers to suppress their date of birth, their residential address if used as a historic registered office address, and their signature from the public register.
The new Companies House forms separate information which is to be added to the public register and information which is not to be disclosed on the public register. This was not the case for the old forms (any appointment filed prior to circa 2008 contained a person’s full date of birth, address and signature). Due to the recent data protection changes we are, quite rightly, more conscious of the volume of our personal information that other people have access to, and this step by Companies House will be widely welcomed.
Another proposal caught under this umbrella of change is the Government’s plan to expand the financial information available on the register. Although it has not been decided how this will look in practice, the suggestions include more detailed profit and loss information and introducing more cross-checking of information between Companies House and other public sector bodies including HMRC. However, Companies House will continue to consult on this matter before any changes are introduced.
It can be argued that Companies House will never be in a position where all the information on the register is 100% accurate because there will be always be an element of human error and until such time as there are machines which can correctly complete a Companies House form then this will always be a factor. However, with the current reforms already in place and the proposed new changes, it should become more difficult for inaccurate information to slip through the net. Achieving a register where the vast majority of information is accurate and consistent is a laudable aim and hopefully these steps will be a move in the right direction.