Powers of the registrar
This is an outline of the 'Powers of the registrar' consultation launched by the UK's Department for Business, Energy and Industrial Strategy in December 2020.
Background to the consultation
In December 2020, BEIS issued three consultations to take forward its plans to reform the powers and role of Companies House (CH). These consultations follow the government’s response to the 2019 consultation on Corporate Transparency and Register Reform, published in September 2020. Aspects of that are ongoing (see Business Law note on Corporate Transparency and Register Reform).
The consultations cover the following areas:
- improving the quality and value of financial information on the UK companies register;
- powers of the registrar; and
- implementing the ban on corporate directors.
The information on this page concerns the consultation on powers of the registrar.
Issues raised in the consultation
The underlying driver of these proposals is to improve reliability of information on the register, linked to a desire to combat use of UK companies for crime. But this consultation involves a mixture of broad issues that could have a major impact (depending upon how they are taken forward) and some detailed suggestions reflecting concrete difficulties encountered. It is therefore difficult to summarise, but the following issues arise:
Power to query information submitted and consequences (eg sanctions for inadequate responses):
- Power to initiate a query generally, pre and post acceptance of filings.
- Broad ability to use power (eg suspicious information or error).
- Discretionary (on a risk basis).
- Process through to resolution - query by notice, response required in 14 days, register annotated immediately for legal effect filings, and other if no response to first request.
- Burden of proof – implied as on filer, explicitly so for names.
- Standard of evidence – not specified.
- Who judges response unsatisfactory – (it appears to be CH).
- Consequences of resolution - pre-filing, unsatisfactory are rejected, post-filing – unsatisfactory are removed by CH or, if legal-effect other than director appointments, by court.
- Sanctions - on filer (none on complainants).
- Complaints about CH conduct – apply existing processes.
- Effect on filing obligations – not considered.
Reform of existing names regime and powers of CH:
- The controls over sensitive words and expressions in company names (s55, SI 2014/3140) will be expanded to include abbreviations and foreign equivalents of such words and expressions.
- CH will be able to refuse to register a company name if it has already been rejected once before by the Company Names Adjudicator (CNA).
- All non-legal-effect filings and some unspecified legal-effect filings will come into the scope of the s1095 (& SI 2009/1803) removal power (remove on application if following notice to interested parties no objections are made or when the applicant is objecting to being named in a filing as a director, if the company cannot provide proof of that person’s appointment).
- The 28 day response period for that s1095 process will be reduced to 14 days.
- CH’s power to change a registered office to the default address will be able to be exercised without an application (if there is evidence that to do so is appropriate), and in all cases CH will be able to ask the company for evidence to support a subsequent application to change to another address. Suggestions are invited as to the appropriate sanction for a company’s failure to adopt (validly) a new address after 12 months at the default address.
- CH will be able to require evidence to support any filing to appoint as director a person whose name was previously falsely filed at CH as a director and removed at the person’s request.
- CH will be empowered to require any and all filings to be electronic. NB, mandatory electronic filing of accounts is the subject of the first consultation noted above.
- A company will no longer be required to maintain a Register of Directors.
- Views are invited on the abolition of each of the Registers of Directors’ Usual Addresses, Secretaries, Members, PSCs and Charges.
- BEIS ask how useful were the 2016 amendments that allowed a company to keep certain registers at CH.
We support the objectives of improving reliability of information on the register and reducing use of UK companies for criminal purposes. We agree that Companies House should adopt a more proactive approach in detecting and removing incorrect information and sharing intelligence with law enforcement authorities (and have increased powers to do so where necessary). However, it is important for the UK economy that businesses remain able to incorporate companies reasonably easily and with a high degree of certainty regarding outcomes. A balance therefore needs to be struck, and this will need to be explored further as the proposals are developed.