For new company incorporations, individuals must confirm that they wish to form a new company for lawful purposes. Individuals must also confirm that none of the proposed officers or persons with significant control (PSCs) are disqualified from being a director, under the directors’ disqualification legislation (the Company Directors Disqualification Act 1986). If the subscribers are individuals, the Bill will make it clear that their full name is required to be included on the memorandum of association.
The Bill proposes that the Registrar will be able to reject company incorporations where the company name:
- Contains or includes a computer code.
- Could be used to facilitate crime.
- Suggests a non-existent connection with a foreign government or an international institution.
A company’s registered name can also be challenged on the basis that it may be confused with a name which has generated goodwill, and would be likely to mislead anywhere in the world, not just in the UK as it is now. It will also be an offence to use a business name in the UK that suggests a connection with a foreign government or international body, where none exists.
The Bill will give the Registrar new powers to change a company’s name if it falls into the new stipulations above or under the Companies Act 2006.
If a company fails to make the required name change within a defined period, the Registrar will have the power to replace that company’s name with its company number.
Any individual who uses a business name which the Registrar has said should be changed, will be committing an offence and could face a penalty of up to £1,000 if they continue to use that name.
Registered offices and email addresses
A company’s registered office will now be required to be at an “appropriate address”. This is an address where:
- A document addressed and delivered to the company would be expected to come to the attention of a person acting on behalf of the company; and
- The company can receive an acknowledgement of delivery of the documents.
Companies will also be required to maintain an “appropriate email address” – one where any emails sent by Companies House will be seen by the person acting on behalf of the company.
First Annual Confirmation Statement
As a one-off, in the first confirmation statement following company incorporation, and after the relevant section of the Bill comes into force, companies whose shares are not publicly traded will need to provide the names and addresses (as they appear in the company’s register of members) of all their members. Publicly traded companies will have to provide names and addresses of members holding at least 5% of the issued shares of any class of the company.
In summary, these changes are welcome in ensuring fraudsters are unable to incorporate companies to exploit the UK’s economy, but it does come with its own challenges. The Bill will make registering a new company more time consuming, which before was relatively easy. With this, there are concerns about whether the Registrar will have adequate resources to allow for such checks to be conducted thoroughly.
Additionally, the new incorporation penalty fees are the lowest in the world, with the majority of incorporations being processed within 24 hours. If the government is serious about developing its role as a ‘gate keeper’, it must focus on ensuring adequate checks are being made, rather than focusing on swift turnarounds on incorporations.
We will continue to follow the Bill’s progress as it makes its way through Parliament. In the meantime, we will continue our analysis of the Bill to focus on the new rules for directors in our next post. If you require further information, please contact Katie Holden, Senior Manager, or a member of the Company Secretarial team.