Newsletter 2012 Issue 01

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Statutory instruments

The Insolvency (Amendment) Rules 2012/469

These Rules amend the Insolvency Rules 1986.

They amend the definition of “excluded debt” in Rule 5A.2 so as to exclude from the scope of a Debt Relief Order any obligation arising from a payment out of the social fund by way of crisis loan or budgeting loan.

They also amend Rule 6.223 so as to include such an obligation in the list of debts that survive an individual’s bankruptcy, and Rule 12.3 to prevent such an obligation being included as a ‘provable debt’ in a bankruptcy.

Rule 2 makes transitional provisions.

The Trade Marks and Trade Marks (Fees) (Amendment) Rules 2012/2012

These Rules amend the Trade Mark Rules 2008.

Rule 2 amends Rule 14 to remove the ability of the proprietor of a Community trade mark or international trade mark entitled to protection in the European Union under the Madrid Protocol to request to be notified of the results of searches under article 4 of the Trade Marks (Relative Grounds) Order 2007.

Rule 2 also amends article 27 of the 2008 Rules to remove the procedure for the merger of trade mark applications before any trademarks have been registered pursuant to those applications. It also provides that an application for merger of trade marks can only be made in respect of trade marks that have the same renewal date.

The amendments made by Rule 2 also prohibit an application for merger of trade marks which are the subject of proceedings for revocation or invalidation or which are the subject of an international registration pursuant to the Madrid Protocol.

The Companies (Disclosure of Auditor Remuneration and Liability Limitation Agreements) (Amendment) Regulations 2011/2198

The Companies (Disclosure of Auditor Remuneration and Liability Limitation Agreements) Regulations 2008 (the “Principal Regulations”) provide for large companies to disclose fees receivable by their auditors and their auditors’ associates. The new regulation amend the Principal Regulations.

Regulation 5 replaces Schedule 2 to the Principal Regulations. The list of types of service in respect of which disclosure has to be made, set out in the substituted Schedule 2A, has been updated to correlate with the revised Ethical Standards published by the Auditing Practices Board of the Financial Reporting Council.

Regulations 3 and 4 make consequential amendments to regulation 5 of the Principal Regulations.

Regulation 2 amends Regulation 5(1)(a) of the Principal Regulations so as to extend the obligation to disclose to remuneration received by any associate of the company’s auditor.

Regulation 1(4) provides that only the accounts for financial years beginning on or after 1st October 2011 are required to meet the changes in these Regulations.

This item has been added to the list of accounts, audit and annual returns statutory instruments.

The Overseas Companies (Execution of Documents and Registration of Charges) (Amendment) Regulations 2011/2194

This important change to the UK law on overseas companies repeals the requirement for such companies to register at Companies House any charge registered on property owned by such a company in the UK. The Regulations apply to overseas companies as defined in CA 2006 sec1044. The Regulations amend the Companies (Execution of Documents and Registration of Charges) Regulations 2009.

This item has been added to the list of overseas companies statutory instruments.

The Statutory Auditors and Third Country Auditors (Amendment) Regulations 2011/1856

These Regulations amend CA 2006 sec1242 and Sched10 and the Statutory Auditors and Third Country Auditors Regulations 2007 (“SATCAR”). The Regulations give effect to Commission Decision 2011/30/EU of 19th January 2011 (O.J. L15, 20.1.2011, p.12) (“the Commission Decision”) on the equivalence of certain third country public oversight, quality assurance, investigation and penalty systems for auditors and audit entities and a transitional period for audit activities of certain third country auditors and audit entities in the European Union. That Decision was made under Article 46(2) of Directive 2006/43/EC on statutory audits of annual accounts and consolidated accounts (O.J. L157, 9.6.2006, p.87) (“the Audit Directive”).

Regulation 4 amends CA 2006 sec1242(4) to enable the Secretary of State to disapply the provisions requiring participation by auditors in arrangements for independent monitoring of audits by means of inspections and for independent investigations for disciplinary purposes where the audit is of a company or class of company incorporated in a third country whose securities are listed in the UK and relates to a financial period commencing on or after 2nd July 2010. This amendment is necessary to give effect to the provisions of Articles 1 and 2.1 of the Commission Decision.

Regulation 5 amends CA 2006 Sche10 to provide that the audits by statutory auditors (as defined in CA sec1210) of companies incorporated in a third country whose securities are listed in the UK may be subject to inspection. This amendment is necessary for the full implementation of the Audit Directive and the Commission Decision. Regulations 2, 3 and 6 make consequential amendments.

Regulation 7 amends the provisions of SATCAR on the registration of auditors of companies incorporated in a third country whose securities are listed in the UK. The amendments remove the category of exempt third country auditor introduced into SATCAR by the Statutory Auditors and Third Country Auditors (Amendment) (No. 2) Regulations 2008 (S.I. 2008/2639) and require all applicants for entry on the register of third country auditors to provide specified information. They introduce a category of “equivalent third country” to give effect to Article 1 of the Commission Decision and amend the list of specified third countries. The amendments allow the designated body (the Professional Oversight Board of the Financial Reporting Council) to give effect to the provisions of the Commission Decision. The registration requirements of SATCAR are subject to the Secretary of State’s powers of direction under section 1239(7) of the Companies Act. Regulation 9 makes transitional provision.

Regulation 8 makes minor consequential amendment to the Statutory Auditors (Delegation of Functions etc) Order 2008 (S.I. 2008/496).

A transposition note has been prepared which sets out how Directive 2006/43/EC is transposed into UK law, updated to reflect the implementation of Commission Decision 2011/30/EU. An Impact Assessment of the effect of the implementation of Directive 2006/43/EC on the costs of business, charities or voluntary bodies was also prepared. Both are available from the Department for Business, Innovation and Skills, 1 Victoria Street, London, SW1H 0ET. They are also available electronically at www.bis.gov.uk.

This item has been added to the list of accounts, audit and annual returns statutory instruments.

Proposed legislation

Regulations to be made under the Climate Change Act 2008

The Climate Change Act includes the commitment in sec85 that the Government will pass regulations to require companies to include information on greenhouse gas emissions in their directors' reports. Businesses listed on the London Stock Exchange will have to report their levels of greenhouse gas emissions from the start of the next financial year under plans announced by Nick Clegg at the Rio+ 20 Summit. Further details are available on the DEFRA website.

Enterprise and Regulatory Reform Bill

Measures include proposals for giving shareholders in listed companies voting rights over executive pay. More details on the consultation exercise are available on the BIS website.

Micro entities

Micro entities are part of the European Economic Recovery Package, to offer small companies simpler accounting rules. The government claims that this will benefit up to 1.5 million small British companies and equate to around 70% of the Register. In reality such companies are already required to register only a modified balance sheet and this initiative is of doubtful value to small businesses. See further on the ICAEW website.

Micro Entities are registered companies or LLPs that do not exceed two of the following three criteria:

Less than 10 employees
Balance sheet not exceeding €350,000
Net turnover not exceeding €700,000

The details of how these regulations will be adopted in the UK are being considered and consultation will almost certainly take place prior to implementation in October 2013.

Companies House

Electronic registration of charges created by companies and LLPs

Companies House will implement the electronic registration of charges by 2013. As part of the reform there will be substantial changes to the data supplied. The current proposals are that the information about a charge will comprise:

the registered name and number of the chargor;
the date of creation of the charge;
whether the charge is the subject of a court order for registration more than 21 days after the date of its creation;
there is a negative pledge;
the name(s) of the person in whose favour the charge has been created, or the name of the security agent or trustee holding the charge for the benefit of one or more persons;
whether the charge is a floating charge;
a brief description of any land (including buildings), ship, aircraft or intellectual property registered in the UK which is subject to a fixed charge or fixed security;
whether the instrument includes a fixed charge or fixed security over any tangible or corporeal property, or any intangible or incorporeal property not described above.

Change to company names examination policy

From 1st September 2011 Companies House has not accepted documents with company names containing minor variations or typographical errors. This change of policy is to ensure that documents are entered onto the correct company record.

They continue to accept a small number of abbreviations and we will also allow the word "THE" to be omitted but only at the front of the name.

Other acceptable abbreviations are available on the Companies House website.

Document Signatures

Companies House has reviewed its policy on the acceptance of signatures on documents delivered to them for registration. Signing a document implies that the signatory has considered and approved its contents. Signing an individual document is not an onerous task, but where large numbers are required, for example on incorporation documents and changes in directors forms, signing each one can take a lot of the person's time. For this reason, some presenters have developed automated systems to apply regularly used signatures.

In some cases Companies House have in the past rejected the documents bearing such signatures and asked for an original signature. In other cases, they have been accepted. Counsel's opinion confirms that it is acceptable for an individual to authorise others to apply their signature to specific documents and this would presumably be done under conditions agreed between the parties involved.

Companies House says it accepts documents in good faith as it is often not possible, nor would it always be acceptable, to verify the contents. In the light of Counsel's opinion and the increasing difficulty of distinguishing between an automatically generated and an original signature, they have concluded that it would be reasonable to treat both kinds of signature in the same way. They will, therefore, accept in good faith that documents presented for filing which have automatically generated signatures have been properly approved by the signatory. Documents will no longer be rejected simply because the signature does not appear to be original.

This change of policy does not extend to accepting documents by fax.

Enquiries: Phil Coates +44 (0)29 20380208 or pcoates@companieshouse.gov.uk

Amending/Second Filing RP04 forms

Companies House now provides a new service which enables customers to submit another form (known as a ‘Second Filing’), of certain forms delivered under the Companies Act 2006 (where the original had been delivered on or after 1 October 2009) which contained inaccuracies. For example, if an incorrect date of birth had previously been registered on a “notice of an appointment as a director” (Form AP01) then another AP01 may be ‘Second Filed’ with the correct date of birth on it. However the Second Filed form must be accompanied by either a form RP04 or LL RP04.

Companies House’ existing practice of accepting “Amending” forms will continue in respect of Companies Act 1985 and Companies (Northern Ireland) Order 1986 documents and those delivered prior to 1 October 2009. Both ‘Second Filings’ and ‘Amending’ documents can only be delivered on paper.

A ‘Second Filing’ of a form may only be filed if the original form was properly delivered and registered and where inaccuracies remain on the form and register. Where the original form was not properly delivered a replacement document may possibly be filed if accompanied by form RP01.

A ‘Second Filing’ is registered it does not enable the original form (or inaccurate information contained within it) to be administratively removed by Companies House.

For companies a RP04 must be submitted with each second filed form and an LLRP04 will need to be submitted with each second filed form for LLPs. A ‘Second Filing’ may be submitted only for the following form types:

Companies

AP01, AP02, AP03, AP04 – Appointment of director, corporate director, secretary or corporate secretary
CH01, CH02 ,CH03, CH04 – Change of director’s, corporate director’s, secretary’s or corporate secretary’s details
TM01, TM02 – Termination of appointment of director or secretary
SH01 – Return of allotment of shares
AR01 – Annual Return

LLPs

LL AP01, LL AP02 – Appointment of member, Appointment of corporate member
LL CH01, LL CH02 – Change of member’s details, Change of corporate member’s details
LL TM01 – Termination of appointment of member
LL AR01 – Annual Return

SIC Codes on annual returns

Companies House now accepts only the latest SIC codes on annual returns. The United Kingdom Standard Industrial Classification of Economic Activities (SIC) is used to classify business establishments and other standard units by the type of economic activity in which they are engaged. The new version of these codes (SIC 2007) was adopted by the UK as from 1st January 2008.

This is the latest version of the Standard Industrial Classification which was last revised in 2003. It’s a numerical classification that Companies House adopted to identify company principal business activities which are required on the annual return (form

The new 2007 SIC codes are available on the Companies House website, with a conversion table from the old codes to the new.

Companies House URIs

As part of its role in the Public Data Group, Companies House have introduced a simple and permanent Universal Resource Identifier (URI) for all companies on the Companies House register. A URI may be stored and freely exchanged as a company reference that can additionally be used to discover the latest company details. A company may publish its own URI on its website for others to use, and even use it to directly embed company details in its pages.

The URI structure is http://business.data.gov.uk/id/company/(companynumber)

The URI links to a standard data set defining the company, such as the free information on WebCheck.

Companies House are developing URIs as part of the government’s transparency agenda of providing easier access to public data, and it will provide a more efficient way of data linking users and the business information industry. The supported formats for URI will be RDF, JSON, XML, CSV, YAML and HTML.

The data returned will on be basic company details, such as company name, registered office address, company status, incorporation date, country of origin, company type, nature of business (SIC), accounting reference date, date of last accounts and annual return filed, date of next accounts and annual return due, previous names.

The introduction of the URI will not effect or change any of the other services provided by Companies House. These will continue to be provided in the same format. Further information at Companies House.

One click registration

The Prime Minister announced a “Business Growth Package” in November 2011, which included:

“….as part of the government’s aim to make the UK one of the easiest places to start a company, Companies House and HMRC are working together to make it easier to incorporate a company at Companies House, sign up for PAYE registration, Corporation Tax and Self Assessment. The ability to register for VAT will be added at a later date.”

This is all part of the “one click registration model” quoted in the Coalition Programme for Government in May 2010. As a first step Companies House has developed a service which allows customers to incorporate and complete the registration for Corporation Tax in one electronic process.