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Introduction
All companies must
have officers. This
means at least one
director and a company
secretary for a
private limited
company, and at
least two directors
and a company secretary
for a public limited
company. The director,
or directors, must
manage the company's
affairs in accordance
with its articles
of association and
the law. Certain
responsibilities
apply to all directors,
whether executive
or non-executive,
and to all types
of company whether
trading or not.
The company secretary
is the chief administrator
of the company.
This guide: The
guide will not tell
you everything about
being a director
or secretary, but
it will give you
a good idea of your
responsibilities
as they relate to
Companies House.
If, after reading
this guide, you
are in doubt about
your responsibilities,
you should seek
professional advice
from a solicitor
or accountant.
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CHAPTER
1
Limited companies:
the basics
1. Do I
really need a limited
company?
The majority of
businesses are not
companies. The reasons
for having a company
are varied, for
example, it could
involve ownership
of property, obtaining
investment funds,
taxation or contractual
relationships. Many
businesses function
satisfactorily as
sole traders or
partnerships.
The key point to
recognise is that
a company is a separate
entity.
- This means that
it is a legal
person in its
own right.
- It is separate
from those who
own or run it,
and has 'limited
liability'.
2.
What does limited
liability mean?
Limited liability
gives the owners
of the company (its
shareholders) protection
if the company fails.
This means that
if a company is
put into liquidation,
the people who own
the company will
only be required
to pay what they
have already paid
or agreed to pay
towards settling
its debts.
3. How do
I set up a limited
company?
If you decide, maybe
after taking professional
advice, that a limited
company is the best
thing for your business,
you can buy a ready-made
company from a company
incorporation agent.
Alternatively, you
can incorporate
a company yourself
- for details see
our booklets, 'Company
Formations' and
'Company Names'.
4. What
can I do with an
unwanted company?
If you decide that
you do not need
a company that you
have set up, you
should consider
putting it into
voluntary liquidation.
If the company cannot
afford this, you
may be able to apply
for it to be struck
off the register.
Our guidance booklets
'Liquidation and
Insolvency' or 'Liquidation
and Insolvency (Scotland)'
and 'Strike-off,
Dissolution and
Restoration' or
'Strike-off, Dissolution
and Restoration
(Scotland)', will
give you more information
on these subjects.
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CHAPTER
2
Role of a company
director
1. Can anyone
be a director?
Generally it is
up to the members
to appoint the people
they believe will
run the company
well on their behalf.
The only restrictions
that prevent anyone
becoming a director
are:
-
the
person must
not have been
disqualified
by a court from
acting as a
company director
(unless he or
she has been
given leave
(permission)
to act by a
court for a
particular company);
- the person must
not be an undischarged
bankrupt (except
with leave of
the court);
- in Scotland,
anybody under
the age of 16;
and
-
for
a PLC or their
subsidiaries,
anybody over
the age of 70
unless specifically
approved by
a general meeting
of the company.
2.
What responsibilities
does a director
have towards Companies
House?
Every company director
has a personal responsibility
to ensure that statutory
documents are delivered
to the Registrar
as and when required
by the Act. In particular:
- accounts (only
for limited companies);
- annual returns
(Form 363);
- notice of change
of directors or
secretaries or
in their particulars
(Forms 288a/b/c);
and
- notice of change
of registered
office (Form 287).
Chapter
4 summarises
what a limited company
has to send to Companies
House.
3. What
happens if accounts
or annual returns
are not filed?
All the directors
of the company could
be prosecuted. Failure
to deliver documents
on time is a criminal
offence.
On conviction, a
director could end
up with a criminal
record and a fine
of up to £5,000
for each offence.
Alternatively, if
the Registrar believes
that the company
is no longer carrying
on business or in
operation, he could
strike it off the
register and dissolve
it. If this happens
all the assets of
the company, including
its bank account
and property, generally
become the property
of the Crown.
The company can
only be restored
to the register
and continue in
existence by means
of a court order.
See our booklet,
'Strike-off, Dissolution
and Restoration'
or 'Strike-off,
Dissolution and
Restoration (Scotland)',
for details.
4. Are directors
really prosecuted?
Yes. On average
more than 1,000
directors are prosecuted
each year for failing
to deliver accounts
and returns to the
Registrar on time.
Persistent failure
to deliver statutory
documents on time
may also lead to
a director being
disqualified from
taking part in the
management of a
company, for a specified
period.
5. What
happens if accounts
are delivered late?
As a director of
a private limited
company, you
normally have a
maximum of 10 months
from the accounting
reference date in
which to deliver
your company's accounts
to the Registrar.
The accounting reference
date is the date
to which your accounts
must be prepared.
As a director of
a public limited
company, you
normally have a
maximum of 7 months
from the accounting
reference date in
which to deliver
your company's accounts
to the Registrar.
Important
if your
company's
first accounts
cover a
period of
more than
12 months,
they must
reach Companies
House within
22 months
of the date
of incorporation
for private
companies
and 19 months
for public
companies.
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If accounts are
received late, the
company will automatically
be charged a 'late
filing penalty'.
These penalties
can be in addition
to any fine imposed
by a court - as
explained in question
3 of this chapter.
The late filing
penalty will be
calculated according
to the following
scale:
| Length
of delay |
Private
company |
Public
company |
| 3
months or less |
£
100 |
£
500 |
| 3
months one day
to 6 months |
£
250 |
£1000 |
| 6
months one day
to 12 months |
£
500 |
£2000 |
| More
than 12 months |
£1000 |
£5000 |
See our booklet,
'Late Filing Penalties',
for details.
6. How can
prosecution and
penalties be avoided?
Make sure your company
complies on time
with all its filing
obligations, not
only in connection
with its accounts
and annual returns,
but in connection
with all other documents
required under the
Act.
7. Isn't
my accountant supposed
to do all this?
Your accountant's
responsibilities
depend on the agreement
you have with him
or her. However,
the responsibility
to deliver accounts
and other statutory
documents rests
entirely with the
directors.
Ensure that your
accountants have
all the necessary
information to prepare
your accounts and
get them audited
on time. If necessary,
chase your accountants.
Don't just assume
they are getting
on with the job.
Accountants
and financial
advisers don't
get prosecuted
or penalised
for late filing.
You do!
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8. Why does
Companies House
need this information?
In exchange for
the benefits of
trading with limited
liability, companies
must deliver certain
information about
themselves to the
Registrar. He must
then make this information
available for inspection
by the public so
that they can make
informed decisions
about companies
that they may wish
to invest in or
do business with.
Remember,
delivery
of documents
does not
take place
until they
reach the
Registrar.
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CHAPTER 3
Role and duties
of a company secretary
1. Does
every company need
a secretary?
Yes. Section 283(1)
of the Act says
every company must
have a secretary.
Section 283(2) states
that a sole director
cannot also be the
secretary.
2. Does
a company secretary
need any qualifications?
The company secretary
of a public limited
company needs to
be qualified as
explained below.
The company secretary
of a private limited
company needs no
formal qualifications.
Section 286 of the
Act (qualifications
of company secretaries)
says that the directors
of a public limited
company must make
sure, as far as
reasonably possible,
that the secretary,
or each joint secretary,
is a person who
appears to them
to have the proper
knowledge and experience
to carry out the
functions of company
secretary. In addition,
the secretary must
also be a person
who:
- is a member
of any of the
following bodies:
the Institute
of Chartered Accountants
in England and
Wales;
the Institute
of Chartered Accountantsof
Scotland;
the Institute
of Chartered Accountants
in Ireland;
the Chartered
Association of
Certified Accountants;
the Institute
of Chartered Secretaries
and Administrators;
the Chartered
Institute of Management
Accountants;
the Chartered
Institute of Public
Finance and Accounting;
or
- held the office
of secretary (or
assistant or deputy
secretary) of
the company on
22 December 1980;
or
-
held
the office of
company secretary
of a company
(except a private
company) for
at least 3 out
of the 5 years
immediately
before his or
her appointment
as secretary;
or
- is a barrister,
advocate or solicitor
called or admitted
in any part of
the UK; or
-
is
a person who
appears to the
directors to
be capable of
carrying out
the functions
of company secretary,
because he or
she holds, or
has held, any
other similar
position or
is a member
of any other
body.
3.
What are the duties
of a company secretary?
They are not specified
by the Act, but
are usually contained
in an employment
contract.
Special
duties
As the secretary
is an officer of
the company under
section 744 of the
Act, they may be
criminally liable
for defaults committed
by the company.
For example failure
to file - in the
time allowed - any
change in the details
of the company's
directors and secretary,
and the company's
annual return.
The secretary may
also have to make
out a statement
of the company's
affairs if an administrative
receiver or a provisional
liquidator is appointed,
or if a winding-up
order is made. (Sections
47 (Section 66 for
Scotland) and 131
of the Insolvency
Act 1986.)
Other duties
The company secretary
usually undertakes
the following duties:
(a) Maintaining
the statutory registers.
These are:
- the register
of members (section
352);
- the register
of directors and
secretaries (section
288);
- the register
of directors'
interests (section
325);
- the register
of charges (section
407 or 422 for
Scottish companies);
and
- for public companies
only, the register
of interests in
shares (section
211).
(b)
Ensuring that
statutory forms
are filed promptly.
You cannot simply
send a letter to
notify the Registrar
that you wish to
change the situation
of the company's
registered office
or that changes
have occurred among
directors or secretaries
or their particulars.
You should normally
use forms 287 and
288a, b or c as
appropriate. You
may also use the
annual return Form
363s in some circumstances
if the return is
due at the convenient
time. Changes of
directors' and secretaries'
details must be
notified within
14 days. There are
many other forms
that need to be
delivered to the
Registrar. See Chapter
4, 'What you have
to send to Companies
House', for
more information.
(c) Providing
members and auditors
with notice of meetings.
You must give them
21 days written
notice of an annual
general meeting.
You must give them
14 days written
notice of a meeting
which is neither
an annual general
meeting or a meeting
to pass a special
resolution. If you
are the secretary
of an unlimited
company, the written
notice required
is 7 days.
(d) Sending the
Registrar copies
of resolutions and
agreements.
You must send the
Registrar copies
of every resolution
or agreement to
which section 380
applies, for example
special and extraordinary
resolutions, within
15 days of them
being passed.
(e) Supplying
a copy of the accounts
to every member
of the company,
every debenture
holder and every
person who is entitled
to receive notice
of general meetings
- also copies demanded
by anyone under
section 239 of the
Act. You must
send accounts at
least 21 days before
a meeting at which
they are to be laid
- see section 238
of the Act.
(f) Keeping,
or arranging for
the keeping, of
minutes of directors'
meetings and general
meetings.
(g) Ensuring
that people entitled
to do so, can inspect
company records.
For example, members
of the company and
members of the public
are entitled to
a copy of the company's
register of members,
and members of the
company are entitled
to inspect the minutes
of its general meetings
and to have copies
of these minutes.
(h) Custody and
use of the company
seal. Companies
no longer need to
have a company seal
but if they do,
the secretary is
usually responsible
for its custody
and use. (Company
seals can be bought
from legal stationers
and company formation
agents.)
4. Does
a company secretary
have any powers?
No, but the Act
allows them to sign
the following re-registration
applications:
- the re-registration
of a limited company
as unlimited -
section 49(4)
of the Act;
- the re-registration
of an unlimited
company as limited
- section 51(4);
- the re-registration
of a public company
as a private company
- section 53(1)(b);
and
- the re-registration
of a private company
as a public company
- section 43(3).
The
secretary is also
allowed to sign
most of the forms
prescribed under
the Act.
5. What
rights does a company
secretary have?
They depend on the
terms of his or
her contract with
the company. The
secretary has no
special rights under
the Act.
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CHAPTER 4
What you have to
send to Companies
House
Company directors
and secretaries
are responsible
for delivering information
to the Registrar.
There are over 200
forms that companies
could file. The
following information
deals only with
the most common
forms and documents
that companies will
use.
1. Accounts
All limited companies,
whether trading
or not, must keep
accounting records
and file accounts
for each accounting
period with the
Registrar.
Unless a company
is claiming exemption
as a medium-sized,
small, audit-exempt
or dormant company,
the accounts will
include:
- directors' report
signed by a director
or the company
secretary;
- a balance sheet
signed by a director;
- a profit and
loss account (or
income and expenditure
account if the
company is not
trading for profit);
- an auditors'
report signed
by the auditor;
- notes to the
accounts; and
- group accounts
(if appropriate).
Our
booklet, 'Accounts
and Accounting Reference
Dates', provides
more information
on preparing and
filing accounts
and about exemptions
from filing.
Accounts must be
produced to a standard
that we can scan
to reproduce electronically
- see
chapter 5.
Directors are personally
responsible for
ensuring that accounts
are prepared and
delivered to Companies
House. Failure to
do so may result
in a criminal conviction
and record for the
director(s) and
will result in financial
penalties for the
company.
2. Annual
returns (Form 363)
An annual return
is a snapshot of
general information
about a company
giving details of
its directors and
secretary, registered
office address,
shareholders and
share capital.
Companies House
will send a pre-printed
'shuttle' annual
return form to the
company's registered
office each year.
It details the information
already held on
our database.
The details should
be:
- checked closely
(and amended if
necessary);
- signed and dated;
and
- returned to
us within 28 days
of the date shown
on the form, with
the filing fee.
If
you file the annual
return late or not
at all, the company
and its director(s)
and secretary can
be prosecuted.
Please note that
annual returns
are quite separate
from annual accounts.
For more information
about how to complete
an annual return,
refer to our 'Annual
Return' booklet.
3. Change
of accounting reference
date - Form 225
Every company has
an accounting reference
date, which is the
date to which the
company's accounts
are prepared each
year. This date
can be changed using
Form 225. For more
information, see
our 'Accounts and
Accounting Reference
Dates' booklet.
4. Change
of registered office
- Form 287
It is vital that
you keep us informed
of the location
of your registered
office. All formal
communications are
sent there.
Every company must
have a registered
office: it is the
'home' of the company
to which all official
documents, notices
and court papers
have to be sent
by law. The address
must be a physical
location, not just
a post office box.
This is because
people have the
right to visit your
office to inspect
certain registers
and documents, and
to deliver documents
by hand.
You can change your
registered office
address by sending
a completed Form
287 to the Registrar.
The change becomes
legally effective
only when we have
registered the form.
5. Change
of directors and
secretary and their
details - Forms
288
There are three
types of Form 288.
All
changes to directors'
and secretary's
details must be
sent to the Registrar
within 14 days of
the change.
6. Allotments
of shares - Form
88(2)
This form should
be sent to Companies
House within one
month of the shares
being allotted.
Our booklet, 'Share
Capital and Prospectuses'
gives more information
about this.
7. Resolutions
Copies of any special
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