New rules due to come into force next week may reduce the record-keeping burden for private companies.
Every company must keep registers of certain information. This includes details about:
- Directors’ residential addresses
- People with significant control over the company (known as the PSC Register).
These records are collectively called ‘statutory registers’. A company must keep its statutory registers at its registered office or another place notified to Companies House. The statutory registers must be kept up to date and most of the information in them must be publicly accessible.
However, the current system involves a degree of duplication: companies have to keep their own internal statutory registers but similar records are also kept by Companies House. Not only do companies have to keep their own registers up to date but they also have to file much of the same information at Companies House.
New rules may make things easier for private companies.
Private companies will have the option to keep the statutory registers listed above on the central register at Companies House without also having to maintain their own in-house registers of the same matters. A company will be able to choose to use the central register for all of these statutory registers or just one (or more) of them. The changes are due to come into force from 30 June 2016 but final confirmation is awaited.
How to use the option
The first step is for a company to notify Companies House (using a prescribed form) that it wishes to use the central register for one or more of its eligible statutory registers. In the case of the register of shareholders, prior consent is required from all the company’s shareholders. For the PSC Register, the company must give its PSCs at least 14 days’ notice of its intention to use the central register. If any PSC objects in that period, the company cannot use the central register for its PSC Register.
Once an election is in force, a company won’t have to maintain its own version of the relevant register(s) but it will have to ensure that the register available via Companies House is kept up to date. The company must keep its historic registers but it doesn’t have to update them.
If a company changes its mind, it can withdraw an election by notifying Companies House.
What’s not to like?
We’re all in favour of reducing administration and this could make things simpler for private companies. However, as is often the case, with the benefit comes a risk. In this case, if a company does elect to use the central register then certain information not currently accessible via Companies House will become publically available.
For example, at the moment only the month and year element of a director’s or PSC’s date of birth can be seen via Companies House (in order to help protect those individuals from identity theft). However, with the new rules, their day of birth will also become available. In addition, shareholder addresses would become available via Companies House if a company chose to keep its register of shareholders on the central register.
For many companies, it may be that the advantages of a reduced administrative burden are not outweighed by the potential disadvantages of increased transparency that would accompany any election to use the central register. It remains to be seen just how many companies take up this new option.