Government priorities for company law reform, January 2011

Potential simplification and reduction in regulatory burden

The Department of Business, Innovation and Skills (BIS) set out in this updated page on its website on 24 January 2011 its priorities for future business law reform, being (unsurprisingly) “those areas which have the potential to further simplify the business environment and deliver reductions in regulatory burdens for business”.  Specifically, these are:

1. Proposals to modernise and simplify the current system for the registration of charges created by companies and limited liability partnerships.  These proposals were the subject of a consultation in mid-2010 and BIS has published its response to the consultation here.
2. A range of options to simplify accounting and audit requirements, especially for small and medium enterprises.
   
3. A review of whether a new corporate form for single person businesses could reduce costs for small entrepreneurs. BIS observes that “at present there are hundreds of thousands of limited companies that are owned and run by a single person, and that person has to comply with extensive rules designed to balance the interests of multiple shareholders and directors”.

On the second and third of these – simplification of accounting and audit requirements, and a new corporate form for single person businesses – BIS has given no further details of its intentions.

Clarification of specific Companies Act 2006 problems – at some point?

BIS also lists three detailed areas of company law where it has recently consulted on making further changes due to difficulties that have arisen since the commencement of relevant Companies Act 20o6 provisions.  These are, with links to the Government’s position following each consultation:

1. Statements of capital as required by the Companies Act 2006: Consultation.  The problem that was identified as soon as the relevant parts of the Companies Act 2006 came into force on 1 October 2009 was the complex and often unascertainable information that the new statement of capital regime required regarding the amount of paid up share capital; soon after commencement, BIS confirmed that it would make changes.  However, BIS has now stated that primary legislation will be required to make these changes and it has not yet identified a suitable legislative vehicle by which to do so (other than in respect of the proposed changes to the Annual Return’s requirements on this point, which BIS hopes to effect in Autumn 2011).
2. Objecting to a Registered Office Address: Consultation.  BIS will consider the case for change, should a suitable legislative vehicle arrive.  Nothing will happen in any hurry there, if at all.
3. Notice of auditors leaving office: Consultation. BIS will consider the case for change, should a suitable legislative vehicle arrive.  Again, no change will happen in a hurry, if at all.

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