01/05/24

Companies House Prosecutions | Registrar’s Powers

Companies House Prosecutions | Registrar’s Powers
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Companies House is an executive agency, sponsored by the Department for Business and Trade. It provides a wide range of services being responsible for the incorporation and dissolution of companies, the maintenance of registers of company information and the provision of information to the public.

It seeks to ensure that all recorded information is as accurate and reliable as possible, to ensure compliance with company law and play a central role in disrupting economic crime.

Companies House enjoys wide investigative powers and, where company’s directors’ breach their statutory obligations under the Companies Act 2006 (‘the Act’), it has the power to commence criminal proceedings against them.

Directors who are convicted will not only suffer the stigma of a criminal conviction but will also face substantial fines and, potentially, disqualification from holding office as a director.

John Veale of KANGS comments upon some of the activities of Companies House.

Offences Liable to Prosecution

Companies House can prosecute directors for a number of offences within the Act such as failing to file:

  • Confirmation Statements – which confirm the accuracy of filed information
  • Company’s Annual Accounts, - section 441 of the Act
  • Directors’ Report
  • Directors’ Remuneration Report (for quoted companies)
  • Auditors’ report – where required
  • Details of Persons with Significant Control
  • Details of Unconfirmed Persons with Significant Control

Most commonly, Companies House prosecutions arise from the failure to file a Company’s annual accounts, contrary to section 451 of the Act which states:

‘If the requirements of section 441 (duty to file accounts and reports) are not complied with in relation to a company's accounts and reports for a financial year before the end of the period for filing those accounts and reports, every person who immediately before the end of that period was a director of the company commits an offence’.

Accordingly, to secure a conviction, Companies House only has to prove:

  • the defendant was a director during the relevant period,
  • the accounts were not received by Companies House within the required period.

However, the offence is not a strict liability offence, and the director may seek to show that he took all reasonable steps to file the accounts correctly. The burden of proof is with the individual director to demonstrate that all reasonable steps were taken and, in order to convict, the court must be sure, beyond reasonable doubt, that such reasonable steps were not taken.

Registrar’s Powers

The Act confers substantial powers upon the Registrar of Companies such as:

Section 1000 – Power to strike off company not carrying on business or in operation.

Section 1001 – Duty to act where a company is being wound up and, inter alia, no liquidator is acting, and the required returns have not been made for a period of six consecutive months.

Section 1002A – Power to strike off company where Registrar considers it has been registered on a false basis.

Consequences for Breach

A conviction of a director, or other company officer, for a breach of any provisions of the Act may result in:

  • Payment of a substantial fine,
  • A daily default fine pending rectification of the breach,
  • Director Disqualification Proceedings preventing the holding of corporate office for a number of years.

Directors of regulated professions, such as solicitors, doctors, or veterinarians, may be required to report any convictions to their Professional Regulator which may impose its own sanctions as appropriate.

How Can We Assist?

Companies House is now extremely pro-active in enforcing the comprehensive statutory obligations which attach to the running and administration of companies, regardless of size and category.

Instances of fraud tied to company manipulation have significantly increased, and Companies House seeks to prevent the same wherever possible.

Generally, Companies House provides directors and company officers an opportunity to explain and rectify any shortcomings through written notification. Anyone receiving such notification from Companies House should seek immediate legal advice and guidance.

The KANGS team provides a wealth of experience gained from supporting clients undergoing investigation and prosecution by Companies House for violations and breaches across all areas of Company Law. If we can be of any assistance at all, we welcome enquiries by:

Tel:       0330 370 4333

Email: info@kangssolicitors.co.uk

We provide a no obligation, initial consultation at our three offices in Manchester, Birmingham, and London. Alternatively, meetings can be held via video conferencing.

Hamraj Kang

Hamraj Kang
Senior Partner

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John Veale

John Veale
Partner

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Tim Thompson

Tim Thompson
Partner

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