Do your clients’ Limited companies comply with company law?
As a company law agency we always do a full review on the companies that we are working on to see if they are compliant before commencing the work.
A high proportion are not, and we have seen many instances of problems arising on the sale of a business or on investigation by HMRC.
Common scenarios include: –
- Shares being allotted and then ignored on all subsequent Confirmation Statements/Annual Returns and Accounts. These shares are issued and valid so should form part of the issued share capital but if unreported the company is non-compliant
- Shares allotted on a company with pre-2006 Companies Act Articles and exceeding the authorised share capital. The authorised share capital still exists on pre-2006 companies unless changed by Resolution
- Share restructures created by filing a form SH01 only, with no details of the rights. No resolutions no forms to reclassify and no amended Articles stating differential dividends or other rights
- Purchase of own shares dealt with by filing one form with no other paperwork. No resolution(s) or contract created. Failure to do this procedure correctly will invalidate the transaction
- Reductions dealt with by one resolution only with no Companies House forms or statement of solvency
These are just a few scenarios and it’s quite common to see these mistakes. Companies House accept all documents in good faith and leave it to others to make a complaint.
Ramifications of non-compliance
- If a complaint is lodged then the company could receive a fine or prosecution
- The Directors are also liable for prosecution
- If the company is being sold it is always checked for compliance, so non-compliance could hold up the sale
- If HMRC investigates the company it could be a major issue if the company hasn’t got the correct wording to allow differential dividends
How can we help?
For a small fee of £15.00 + vat per company we will complete a full company Health Check and produce a Report.
This will include: –
- Review of the company from incorporation
- Review of the Articles (including the share capital)
- Ensure all paperwork for all events have been completed correctly and comply with company law
- We will also issue recommendations if the company is non-compliant
For companies over 20 years old it may be necessary to obtain a DVD history and so we will advise an extra fee of £25.00 for the registrars’ fee for the DVD.
If you have multiple companies you wish to check, or you require further information feel free to contact Steve Blackmore on 029 2022 9080, or email email@example.com