Role of a company
1. Can anyone be
Generally it is up to the members (shareholders)
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;
• 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:
• annual returns (Form 363);
• notice of change of directors or secretaries
or in their particulars (Forms 288a/b/c);
• notice of change of registered office (Form
These duties can be performed by the Company
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.
4. Are directors
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. 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. 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.
The late filing penalty will be calculated
according to the following scale:
|Length of delay
|3 months or less
|3 months one day to 6 months
|6 months one day to 12 months
|More than 12 months
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!
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.