Monday 6 May 2019

UK: Government consultation 'Corporate Transparency and Registration Reform'

The Department for Business, Energy and Industrial Strategy has published a consultation paper titled Corporate Transparency and Registration Reform: see here (pdf). The paper sets out reforms to the company incorporation process within the UK, in particular the information and checks that are necessary to ensure the accuracy of the information on the register concerning directors, shareholders and those with significant control.

Views are sought on extending the powers of Companies House so that it can query information that is filed, seek further evidence and share information with other agencies. The paper also seeks views on proposals to limit the power, under section 392 of the Companies Act 2006, to shorten a company's accounting reference period; this mechanism, the paper states, is being used abusively by some in order to delay the availability of financial information.

The press release accompanying the consultation paper carries the headline "Companies House reforms consultation launched today" but it is important to note that the paper also seeks views on aspects of company law not immediately obvious from this focus on Companies House. The best example of this is a question that may well prove controversial: should there be a cap on the number of directorships that one person can hold? The paper states: " unlikely that a person could reasonably be considered to be performing their duties as a company director where they are holding large numbers of directorships ... The government is therefore considering the introduction of a cap on the number of directorships that an individual may hold concurrently" (at para. 237).

Views are also sought on the extension of section 124A of the Insolvency Act 1986 - which provides that the Secretary of State may seek to wind-up a company or limited liability partnership on public interest grounds - to limited partnerships. This suggestion follows other proposals published last year on the reform of limited partnership law: see here (pdf).

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