Directors
and Secretaries Guide - GBA1
Contents
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Introduction
All companies must have officers. This means at least one
director and a company secretary for a private limited company,
and at least two directors and a company secretary for a public
limited company. The director, or directors, must manage the
company's affairs in accordance with its articles of association
and the law. Certain responsibilities apply to all directors,
whether executive or non-executive, and to all types of company
whether trading or not. The company secretary is the chief
administrator of the company.
This guide:
- explains some of the main responsibilities
of a company's officers; and
- deals with some of the key requirements
of the Companies Act 1985 in relation to the delivery of
documents to Companies House. When we refer to 'the Act'
in this booklet, we mean the 1985 Companies Act (as amended
in 1989 and later).
The guide will not tell you everything
about being a director or secretary, but it will give you
a good idea of your responsibilities as they relate to Companies
House.
If, after reading this guide, you are in doubt about your
responsibilities, you should seek professional advice from
a solicitor or accountant.
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CHAPTER
1
Limited companies: the basics
1. Do I really need a limited company?
The majority of businesses are not companies. The reasons
for having a company are varied, for example, it could involve
ownership of property, obtaining investment funds, taxation
or contractual relationships. Many businesses function satisfactorily
as sole traders or partnerships.
The key point to recognise is that a company is a separate
entity.
- This means that it is a legal person
in its own right.
- It is separate from those who own or
run it, and has 'limited liability'.
2. What does limited liability
mean?
Limited liability gives the owners of the company (its shareholders)
protection if the company fails.
This means that if a company is put into liquidation, the
people who own the company will only be required to pay what
they have already paid or agreed to pay towards settling its
debts.
3. How do I set up a limited company?
If you decide, maybe after taking professional advice, that
a limited company is the best thing for your business, you
can buy a ready-made company from a company incorporation
agent. Alternatively, you can incorporate a company yourself
- for details see our booklets,
'Company Formations' and
'Company Names'.
4. What can I do with an unwanted company?
If you decide that you do not need a company that you have
set up, you should consider putting it into voluntary liquidation.
If the company cannot afford this, you may be able to apply
for it to be struck off the register.
Our guidance booklets
'Liquidation and Insolvency' or
'Liquidation and Insolvency (Scotland)' and
'Strike-off, Dissolution and Restoration' or
'Strike-off, Dissolution and Restoration (Scotland)',
will give you more information on these subjects.
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CHAPTER
2
Role of a company director
1. Can anyone be a director?
Generally it is up to the members 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; and
- 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:
- accounts (only for limited companies);
- annual returns (Form 363);
- notice of change of directors or secretaries
or in their particulars (Forms 288a/b/c); and
- notice of change of registered office
(Form 287).
Chapter
4 summarises what a limited company has to send to Companies
House.
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. See our booklet,
'Strike-off, Dissolution and Restoration' or
'Strike-off, Dissolution and Restoration (Scotland)', for
details.
4. Are directors really prosecuted?
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.
As a director of a public limited company, you normally
have a maximum of 7 months from the accounting reference date
in which to deliver your company's accounts to the Registrar.
| 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 - as explained in
question 3 of this chapter. The late filing penalty will
be calculated according to the following scale:
| Length of delay |
Private
company |
Public
company |
| 3 months or less |
£ 100 |
£ 500 |
| 3 months one day to 6 months |
£ 250 |
£1000 |
| 6 months one day to 12 months |
£ 500 |
£2000 |
| More than 12 months |
£1000 |
£5000 |
See our booklet, 'Late
Filing Penalties', for details.
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.
| Remember,
delivery of documents does not take place until they reach
the Registrar. |
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CHAPTER
3
Role and duties of a company secretary
1. Does every company need a secretary?
Yes. Section 283(1) of the Act says every company must have
a secretary. Section 283(2) states that a sole director cannot
also be the secretary.
2. Does a company secretary need any qualifications?
The company secretary of a public limited company needs to
be qualified as explained below. The company secretary of
a private limited company needs no formal qualifications.
Section 286 of the Act (qualifications of company secretaries)
says that the directors of a public limited company must make
sure, as far as reasonably possible, that the secretary, or
each joint secretary, is a person who appears to them to have
the proper knowledge and experience to carry out the functions
of company secretary. In addition, the secretary must also
be a person who:
- is a member of any of the following
bodies:
the Institute of Chartered Accountants in England and Wales;
the Institute of Chartered Accountants of Scotland;
the Institute of Chartered Accountants in Ireland;
the Chartered Association of Certified Accountants;
the Institute of Chartered Secretaries and Administrators;
the Chartered Institute of Management Accountants;
the Chartered Institute of Public Finance and Accounting;
or
- held the office of secretary (or assistant
or deputy secretary) of the company on 22 December 1980;
or
- held the office of company secretary
of a company (except a private company) for at least 3 out
of the 5 years immediately before his or her appointment
as secretary; or
- is a barrister, advocate or solicitor
called or admitted in any part of the UK; or
- is a person who appears to the directors
to be capable of carrying out the functions of company secretary,
because he or she holds, or has held, any other similar
position or is a member of any other body.
3. What are the duties of a
company secretary?
They are not specified by the Act, but are usually contained
in an employment contract.
Special duties
As the secretary is an officer of the company under section
744 of the Act, they may be criminally liable for defaults committed
by the company. For example failure to file - in the time allowed
- any change in the details of the company's directors and secretary,
and the company's annual return.
The secretary may also have to make out a statement of the company's
affairs if an administrative receiver or a provisional liquidator
is appointed, or if a winding-up order is made. (Sections 47
(Section 66 for Scotland) and 131 of the Insolvency Act 1986.)
Other duties
The company secretary usually undertakes the following duties:
(a) Maintaining the statutory registers. These are:
- the register of members (section 352);
- the register of directors and secretaries
(section 288);
- the register of directors' interests
(section 325);
- the register of charges (section 407
or 422 for Scottish companies); and
- for public companies only, the register
of interests in shares (section 211).
(b) Ensuring that statutory forms
are filed promptly. You cannot simply send a letter to notify
the Registrar that you wish to change the situation of the company's
registered office or that changes have occurred among directors
or secretaries or their particulars. You should normally use
forms 287 and 288a, b or c as appropriate. You may also use
the annual return Form 363s in some circumstances if the return
is due at the convenient time. Changes of directors' and secretaries'
details must be notified within 14 days. There are many other
forms that need to be delivered to the Registrar. See
Chapter 4, 'What you have to send to Companies House', for
more information.
(c) Providing members and auditors with notice of meetings.
You must give them 21 days written notice of an annual general
meeting. You must give them 14 days written notice of a meeting
which is neither an annual general meeting or a meeting to pass
a special resolution. If you are the secretary of an unlimited
company, the written notice required is 7 days.
(d) Sending the Registrar copies of resolutions and agreements.
You must send the Registrar copies of every resolution or agreement
to which section 380 applies, for example special and extraordinary
resolutions, within 15 days of them being passed.
(e) Supplying a copy of the accounts to every member of the
company, every debenture holder and every person who is entitled
to receive notice of general meetings - also copies demanded
by anyone under section 239 of the Act. You must send accounts
at least 21 days before a meeting at which they are to be laid
- see section 238 of the Act.
(f) Keeping, or arranging for the keeping, of minutes of
directors' meetings and general meetings.
(g) Ensuring that people entitled to do so can inspect company
records. For example, members of the company and members
of the public are entitled to a copy of the company's register
of members, and members of the company are entitled to inspect
the minutes of its general meetings and to have copies of these
minutes.
(h) Custody and use of the company seal. Companies no
longer need to have a company seal, but if they do, the secretary
is usually responsible for its custody and use. (Company seals
can be bought from legal stationers and company formation agents.)
4. Does a company secretary have any powers?
No, but the Act allows them to sign the following re-registration
applications:
- the re-registration of a limited company
as unlimited - section 49(4) of the Act;
- the re-registration of an unlimited
company as limited - section 51(4);
- the re-registration of a public company
as a private company - section 53(1)(b); and
- the re-registration of a private company
as a public company - section 43(3).
The secretary is also allowed to sign
most of the forms prescribed under the Act.
5. What rights does a company secretary have?
They depend on the terms of his or her contract with the company.
The secretary has no special rights under the Act.
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CHAPTER
4
What you have to send to Companies House
Company directors and secretaries are responsible for delivering
information to the Registrar. There are over 200 forms that
companies could file. The following information deals only
with the most common forms and documents that companies will
use.
1. Accounts
All limited companies, whether trading or not, must keep accounting
records and file accounts for each accounting period with
the Registrar.
Unless a company is claiming exemption as a medium-sized,
small, audit-exempt or dormant company, the accounts will
include:
- a directors' report signed by a director
or the company secretary;
- a balance sheet signed by a director;
- a profit and loss account (or income
and expenditure account if the company is not trading for
profit);
- an auditors' report signed by the auditor;
- notes to the accounts; and
- group accounts (if appropriate).
Our booklet,
'Accounts and Accounting Reference Dates', provides more
information on preparing and filing accounts and about exemptions
from filing.
Accounts must be produced to a standard that we can scan to
reproduce electronically - see
chapter 5.
Directors are personally responsible for ensuring that accounts
are prepared and delivered to Companies House. Failure to do
so may result in a criminal conviction and record for the director(s)
and will result in financial penalties for the company.
2. Annual returns (Form 363)
An annual return is a snapshot of general information about
a company giving details of its directors and secretary, registered
office address, shareholders and share capital.
Companies House will send a pre-printed 'shuttle' annual return
form to the company's registered office each year. It details
the information already held on our database.
The details should be:
- checked closely (and amended if necessary);
- signed and dated; and
- returned to us within 28 days of the
date shown on the form, with the filing fee.
If you file the annual return late
or not at all, the company and its director(s) and secretary
can be prosecuted.
Please note that annual returns are quite separate from
annual accounts. For more information about how to complete
an annual return, refer to our
'Annual Return' booklet.
3. Change of accounting reference date - Form 225
Every company has an accounting reference date, which is the
date to which the company's accounts are prepared each year.
This date can be changed using Form 225. For more information,
see our 'Accounts and
Accounting Reference Dates' booklet.
4. Change of registered office - Form 287
It is vital that you keep us informed of the location of your
registered office. All formal communications are sent there.
Every company must have a registered office: it is the 'home'
of the company to which all official documents, notices and
court papers have to be sent by law. The address must be a physical
location, not just a post office box. This is because people
have the right to visit your office to inspect certain registers
and documents, and to deliver documents by hand.
You can change your registered office address by sending a completed
Form 287 to the Registrar. The change becomes legally effective
only when we have registered the form.
5. Change of directors and secretary and their details
- Forms 288
There are three types of Form 288.
-
Form 288(a) is used for the appointment of an officer.
-
Form 288(b) is used for an officer ceasing to act (resignation,
removal, death etc).
-
Form 288(c) is used for a change in details of an officer,
for example, a change of name or new residential address.
All changes to directors' and secretary's
details must be sent to the Registrar within 14 days of the
change.
Electronic delivery
of directors' details and registered office address:
The Registrar’s PROOF (PROtected
On-line Filing) Scheme
Company directors hold
an important position in a company: they have power
to make purchases and enter into credit arrangements
on behalf of the company. Similarly, the registered
office address is important because it is the address
to which all official communications will be sent.
Records held at Companies House
are sometimes used to check the legitimacy of a company
and its directors before credit or loans are made therefore
it is important that the records are correct. Companies
are vulnerable to fraud if the wrong people get themselves
on record as company directors or a bogus registered
office address is filed.
In order to combat fraudsters posing
as legitimate directors, Companies House offers companies
a fully electronic and secure system for notifying changes
of directors and changes to the registered office address.
If you opt to only notify these electronically, they
will be protected by electronic codes and we will not
accept notices from your company delivered in any other
format.
In order to take advantage of this
service you will first need to register through our
WebFiling service for a security code and an authentication
code to enable your company to file electronically.
To find out more about this please visit our web site
at
www.companieshouse.gov.uk.
You will then need to complete an
‘Opt-in’ form (PR1) and agree to the terms and conditions
so that any change of directors or change of registered
office address are only accepted by
Companies House it they are delivered by the secure
electronic method and never on a paper form. The ‘Opt-in’
form and terms and conditions are available from our
web site or by calling 0870 33 33 636. The completed
form must be posted back to Companies House.
This service is voluntary; you may
opt-out at any time and we will revert to accepting
notices from your company delivered electronically or
on paper forms. |
6. Allotments of shares - Form 88(2)
This form should be sent to Companies House within one month
of the shares being allotted.
Our booklet, 'Share Capital
and Prospectuses' gives more information about this.
7. Resolutions
Copies of any special or extraordinary resolutions and certain
types of ordinary resolutions, need to be sent to Companies
House within 15 days of them being passed by the company -
our booklet, 'Resolutions',
gives more information about this. When a resolution alters
the memorandum or articles of a company, a copy of the amended
document must also be sent in at the same time as the resolution
.
There is no special form to complete but the document must
be produced to a standard that we can scan and reproduce electronically
- see Chapter 5.
8. Mortgages and charges
Details of any mortgage or charge created by the company must
be sent to Companies House within 21 days. See our booklet,
'Company Charges and
Mortgages' or 'Company
Charges (Scotland)'.
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CHAPTER
5
Quality of documents
1. What happens to documents sent to Companies House?
The documents and forms you deliver to Companies House are
scanned to produce an electronic image. The original documents
are then stored, and the electronic image is used as the working
document.
When your business contacts view the company record, they
see the electronic image reproduced on-line. So it is important
not only that the original is legible, but that it can also
produce a clear copy.
This chapter lays down a few quality guidelines to follow
when preparing a document for filing at Companies House.
2. What happens if my documents do not meet the guidelines?
Section 706 of the Act allows Companies House to reject documents
that cannot be captured electronically, giving a notice saying
why they are unacceptable. An acceptable copy must be delivered
within 14 days of the notice (otherwise we treat the original
as not having been delivered).
3. How should documents be set out?
Every document delivered to the Registrar must state in a
prominent position the registered number of the company, and
must comply with any requirements specified by the Registrar
relating to the legibility of that document.
Briefly, documents should be on A4 size, plain white paper
between 80gsm and 100gsm in weight with a matt finish. Text
should be black, clear, legible, and of uniform density. Letters
and numbers must not be less that 1.8mm high, with a line
width of not less than 0.25mm.
When
you fill in a form:
- use black ink or black type;
- use bold lettering (some elegant
thin typefaces and pens give poor quality copies);
- don't send a carbon copy;
- don't use a dot matrix printer;
and
- remember - photocopies can result
in a grey shade that will not scan well.
When you complete other
documents, please remember:
- the points already made relating
to completing forms;
- to use A4 size paper with a good
margin;
- to supply them in portrait format
(that is with the shorter edge across the top);
- to include the company number
in the top right-hand corner of the first page.
|
Important: coloured ink can drop out (disappear)
when a document is scanned to produce an image. To prevent
this - always use black ink to complete and sign
all documents.
4. What are the most common problems to avoid?
Glossy accounts
If you are producing colour-printed glossy accounts, please
save them for your shareholders and others who will appreciate
them. We still need black on white with a matt finish. A typed
unbound version or printer's proof is ideal, provided it has
the necessary signatures.
Members lists
Our requirements on document quality apply equally to the
lists of shareholders that accompany annual returns and allotment
forms.
If these are computer prints, it is essential that the print
quality is good. We have particular problems with lists printed
on green-lined computer paper. We can handle members lists
on paper up to 14.5" x 12".
We will accept documents delivered on certain types of computer-generated
microfiche (comfiche) on a black master - as an alternative
to paper - provided we can duplicate them on our diazo machines.
We may also be able to accept magnetic tape for very large
listings.
5. Can I find out more about this?
For further guidance on print requirements and comfiche formats,
contact 029 2038 0575
For guidance on acceptable magnetic tape systems and formats,
contact 029 2038 0242.
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CHAPTER
6
Further information
1. Can I use information from Companies House?
Yes. Company information is vital to informed decision-making.
At Companies House you'll find information on every company
in Great Britain, from names and addresses to annual returns
and accounts. But note that most unlimited companies do not
have to file their accounts.
You can also get information about oversea companies that
establish a place of business in this country or open a branch
here.
You can order a company search by telephoning 0870 3333636
or by visiting any of our
offices.
2. Where do I get forms and guidance booklets?
This is one of a series of Companies House booklets which
provide a simple guide to the Companies Act.
Statutory forms and
guidance booklets are available, free of charge from Companies
House. The quickest way to get them is through this website
or by telephoning 0870 3333636.
If you prefer you can write to our stationery sections in
Cardiff or
Edinburgh.
Forms can also be obtained from legal stationers, accountants,
solicitors and company formation agents - addresses in business
phone books.
3. How do I send information to the Registrar?
You may deliver documents to the Registrar by hand (personally
or by courier), including outside office hours, bank holidays
and weekends to Cardiff, London and Edinburgh.
You may also send documents by post or by the Hays Document
Exchange service (DX). If you send documents, please address
them to:
For companies
incorporated in
England & Wales: |
For companies
incorporated in
Scotland: |
The Registrar of Companies
Companies House
Crown Way
Cardiff CF14 3UZ
DX33050 Cardiff
|
The Registrar of Companies
Companies House
37 Castle Terrace
Edinburgh EH1 2EB
DX ED235 Edinburgh 1 |
If you are sending documents by post, courier or Britdoc (DX)
and would like a receipt, Companies House will provide an acknowledgement
if you enclose a copy of your covering letter with a pre-paid
addressed return envelope. We will barcode your copy letter
with the date of receipt and return it to you in the envelope
provided.
Please note: an acknowledgement of receipt does not mean that
a document has been accepted for registration at Companies House.
|
