Memorandum submitted by Companies House
1. This memorandum includes details of Companies
House achievements over the past year and its priorities for the
coming year. From the customer perspective it deals with levels
of satisfaction with our services, our development of e-services
and our work to protect companies against fraud. It also deals
with implementation of the Companies Act 2006 and the changes
in our internal processing systems which provide a solid base
for implementation of the Act.
2. The memorandum also includes an outline
of Companies House's role in working with other business registries
and with colleagues in Government to influence European policy.
INTRODUCTION
3. Companies House is an Executive Agency
of the Department for Business, Enterprise and Regulatory Reform
(BERR). It became a Trading Fund in 1991. It is responsible to
Parliament through ministers and produces an Annual Report and
Accounts, which is available at www.companieshouse.gov.uk. Companies
House has two main functions:
— the incorporation, dissolution and
restoration of limited companies; and
— the maintenance of a register of
information filed by companies under the Companies Acts and related
legislation, which it makes available for public inspection.
4. Some key statistics:
— 120 new companies formed every working
hour;
— 2,640,000 companies on the register;
— 42 documents processed every minute;
— 42,100,000 hits per month on Companies
House electronic services;
— 80% electronic document filing capability
by volume;
— 315,000,000 pages of company information
on the database; and
— one company documents bought every
four seconds.
5. In 2007-08 we delivered:
Customers
— record levels of customer satisfaction;
— record documents registered;
— record register size; and
— record levels of electronic transactions.
People
Processes
— new Companies House Internal Processing
System (CHIPS).
Financial
— reduced operating cost per company;
and
— our return on investment (ROI) target.
6. Our ambition is to be a customer centred
organisation, developing and delivering services which offer real
value for money and benefits to our customers. Our priorities
for 2008-09 are:
Customers
— deliver consistently high levels
of customer satisfaction;
— develop our customer insight;
— deliver the benefits of e-transactions
to more customers; and
— implement some elements of the Companies
Act 2006.
People
— make our new values live throughout
Companies House; and
Processes
— embed CHIPS and deliver post-implementation
efficiencies; and
— develop the systems for full implementation
of the Companies Act 2006.
Financial
— operate within our agreed financial
framework; and
— prepare a fees order for October
2009.
CUSTOMER SERVICES
Customer satisfaction
7. During 2007 Companies House achieved
satisfaction rates in excess of 85% in each quarter. This consistently
high rating reflects a strong track record of customer focus and
constant attention to providing high quality customer service.
Companies House encourages frank and honest feedback from customers
because this helps us to improve our service delivery.
8. Companies House monitors customer satisfaction
through:
— customer satisfaction surveys;
— 21 regional focus groups each year;
— 15 information days each year;
— feedback from customer emails and
phone calls; and
— regular meetings held by a team of
customer care managers.
9. Customer contact transaction figures
per month are approximately:
— 100,000 telephone calls for Companies
House;
— 140,000 telephone calls for the Contact
centre;
— 20,000 emails for the Contact centre;
and
— 2,000 faxes and related correspondence
for the Contact centre.
10. We have comprehensive complaints and
appeals procedures, including access to an independent adjudicator.
Companies House website
11. Companies House's website is the fourth
most commonly visited website in Government.
The total website hits averages over 40 million
per month with January 2008 having over 50 million hits, 30 million
of which were searches on our WebCHeck service.
E-Filing
12. Companies House is working towards providing
a fully e-enabled service for all its customers and has made significant
progress over the last four years. (Annex 1, fig 1)
13. We have increased the types of document
we can accept electronically. At the end of 2004-05, 67% of documents
were e-enabled, by 2007-08, this had grown to 80%. This included
incorporations and annual returns, which have high percentages
of e-take-up. We have attached a graph showing take-up of online
services at Companies House and how they compare with other Government
organisations. (Annex 1, fig 2).
Compliance and late filing penalties
14. Ministers set Companies House a target
to achieve high rates of compliance, in order to ensure a transparent
and up to date register. We help companies to comply by reminding
them before the filing dates that accounts and annual returns
are due. When companies go into default we contact them with the
objective of securing compliance.
15. Continued non-compliance can lead to
the prosecution of directors or the company being struck off the
register. As an incentive to ensure timely compliance, Parliament
imposes Late Filing Penalties (LFP) on companies which file their
accounts late.
16. Parliament has recently approved changes
to the LFP regime which will affect all companies filing late.
There will be increased penalties and faster progression through
penalty bands for late filing of accounts. (Annex 2) Furthermore,
penalties will be doubled for repeated failure to file on time.
The new penalties will come into effect on 1 February 2009.
Fees
17. Companies House reviews its fees annually
to ensure we are charging customers the correct amounts, in line
with the principle of cost-recovery. Changes brought in by the
Companies Act 2006 mean that Companies House will need to implement
a new fees order in October 2009.
18. Companies House provides certain information
free, for example, company indexes, basic company information,
filing history, insolvency details etc. Customers can use this
to identify more easily the information and images they wish to
purchase.
FRAUD
19. The UK operates an open register of
companies, with easy access to data. This allows business to incorporate
companies easily and gives law enforcement agencies easy access
to data to help combat crime.
20. Business and government want a system
where it is easy to establish companies and to conduct business
relatively free from the burdens of regulation. The challenge
is to balance this need for a low regulatory burden with the need
to prevent the companies register being used to facilitate fraud
and financial crime.
21. Getting companies to understand the
need for self-help is a major challenge. We have put a great deal
of effort into communicating the opportunities we have created
for companies to protect themselves. We have developed a three-point
plan:
— E-filing. Electronic filings are
protected by authentication codes.
— PROtected On-line Filing (PROOF).
Companies agree to file only electronically and Companies House
queries any data submitted on paper.
— Monitor. Copies of any document filed
for a particular company are sent to customers, alerting them
to the filing.
22. In collaboration with the Metropolitan
Police we launched Operation Sterling in May 2005, targeting financial
crime in London. We have opened ourselves up much more to contact
with other organisations and have expanded work from Operation
Sterling to provide data to law enforcement agencies nationally:
— We contributed evidence to the Financial
Action Task Force audit of the UK's effectiveness in dealing with
money laundering and the finance of terrorism
— We are continuing to work with the
Metropolitan Police developing our intelligence role under their
guidance.
— We are working with the Serious Organised
Crime Agency to contribute to data sharing among the UK's law
enforcement agencies.
— We have joined the Financial Services
Authority's Financial Information Network. Gaining access to expertise
and sharing experience on specific types of crime, such as investor
take-over fraud.
— We have joined the Home Office's
Identity Fraud Forum.
— We are in dialogue with private sector
organisations such as Credit Industry Fraud Avoidance System,
British Banking Association and local fraud forums
— We notify credit reference agencies
of all changes in the companies register, so that they can alert
their customers to check out changes in registered office addresses
or directors' details.
23. The National Fraud Strategy called for
law enforcement agencies to make use of the data in the companies
register to combat financial crime and it established the City
of London Police (CLP) as the lead force for combating fraud.
We have met CLP to ensure that use of data from Companies House
is included in their resource planning.
INTERNAL PROCESSING—CHIPS
24. Companies House has recently implemented
its Companies House Information Processing Systems (CHIPS) programme,
which has replaced its 20 year old electronic internal processing
system (STEM).
25. The initial requirements phase for this
programme took place in April 2001. Development was outsourced
to a private sector partner through a formal tendering procedure,
with a planned completion date of April 2005.
26. During 2003, Companies House was concerned
at increasing cost and changing requirements. The structure of
the programme was reviewed at the end of 2003 and Companies House
decided in January 2004 to bring management of the programme in-house.
27. There were further revisions to the
programme plan in February 2005 and January 2007. The programme
was successfully implemented in February 2008. Although we experienced
the inevitable teething problems in the early stages of implementing
any new system, performance of the new system is good:
— Performance at database level matches
that of the previous system.
— Data migration to the new system
has been successful.
— Service incidences on day two of
implementation were at pre-CHIPS levels.
— Buy-in from staff has been excellent.
— The internal IT team has responded
exceptionally well to any problems encountered by staff operating
a new system.
28. Revisions to the plan also meant a re-assessment
of costs which over the life of the programme increased from the
original estimate. (Annex 3).
29. CHIPS will:
— Provide much greater flexibility
to develop electronic services which will help to simplify the
ways in which customers do business with Companies House.
— Provide a solid base for implementation
of the Companies Act 2006, which maximises the act's potential
to make regulation easier for small business.
— Allow Companies House to deliver
efficiencies which result in cost benefits to customers.
— Allow Companies House to extend the
hours of service availability to seven days a week (by December
2008).
COMPANIES ACT
2006
30. The Companies Act 2006, which received
Royal Assent on 8 November 2006, introduces sweeping changes to
simplify and improve company law. Company law has been substantially
rewritten to make it easier to understand and more flexible—especially
for small businesses.
31. The Act introduces a range of deregulatory
measures which have been widely welcomed by business. It will
bring particular benefit for private companies eg it removes the
requirement for private companies to have a company secretary
or to hold an annual general meeting unless they positively opt
to. The Act is expected to deliver benefits to business of around
£250 million a year.
32. The Act introduces a statutory statement
of directors' general duties, which will provide greater clarity
on what is expected of directors. It also encourages disclosure
of strategic, forward-looking information to shareholders through
the enhanced business review.
Implementation of the Act
33. The implementation of the Act is highly
complex, and requires both the making of more than 40 Statutory
Instruments (managed by BERR) and a large number of changes to
Companies House systems and processes. Due to this interdependence,
the decision was taken for the implementation programme to be
jointly managed between BERR and Companies House and a close working
relationship has been maintained.
34. The Government has had extensive discussion
with business and other stakeholders about the timetable for commencement
of the Act. There are a number of important considerations which
we have taken into account.
— We want to introduce benefits for
business as quickly as possible. It is important, for example,
that private companies can benefit as quickly as possible from
the deregulatory measures introduced by the Act (such as those
on resolutions and meetings).
— We want to minimise the commencement
dates in line with the Government's commitment to small and medium
sized businesses to hold to common commencement dates.
— We recognise that companies and their
legal advisers will need to familiarise themselves with the Act's
provisions and make proper preparation for full implementation.
In particular, where substantive secondary legislation is needed,
this needs to be in place in good time before the relevant provisions
are commenced.
— We need to ensure that we implement
EU company law requirements falling due during the implementation
period alongside our implementation of the Act in a way which
minimises the number of changes for business.
— We also need to ensure that we have
sufficient time to implement important changes to Companies House
systems and processes in relation to areas such as company formation,
and give appropriate notice to users of the new forms.
Decision to Delay Final Implementation
35. By October/November 2007 we had made
considerable progress in making the necessary changes to our systems
and processes. However, there remained a great deal of work to
be done and we advised BERR at that time that we could not be
absolutely confident that the necessary changes could be completed
on time.
36. In the light of this advice, the Minister
for Competitiveness, Stephen Timms, announced by Written Statement
on 7 November that the commencement date for most of the provisions
due to be commenced on 1 October 2008 should be put back to 1
October 2009. This decision was taken in a timely manner in order
to provide business with the certainty it needs about the implementation
timetable, and to ensure that companies do not incur unnecessary
costs.
37. Final details of the commencement timetable
were announced by Written Statement on 13 December 2007. The provisions
which will still be commenced in October 2008 include the new
procedure for private companies to make capital reductions supported
by solvency statement.
The Cost to Business of the Delay
38. BERR believes that, by announcing the
change in the implementation timetable early, the cost to business
was minimised. In particular, the Department did not want companies
to make changes to their articles of association next year which
wrongly made reference to October 2008 because of the risk that
there would have had to be subsequent changes, putting companies
to unnecessary expense.
EUROPE AND
BEYOND
39. Companies House contributes to the European
agenda on companies by informing central departments in their
discussion of policy and through the network of European and other
companies registries.
How we are contributing to the development of
EU Wide Policy
40. We helped draft the UK response to the
EU consultation on the Corporate Law Action Plan.
41. We have used our experience of implementing
the European Regulation introducing the Societas Europaea (SE),
which is equivalent to a public limited company, to help other
government departments implementing similar legislation (such
as the European Co-operative) to ensure consistency in approach.
42. We have been working with BERR on the
Services Directive which will introduce a point of single contact
for customers based in one member state wishing to offer services
in another member state. The point of single contact will provide
information to potential service providers, such as regulations
governing provision of services and the types of corporate vehicles
available.
43. We have been working with Treasury on
the UK's response to a cost-benefit analysis of European anti-money
laundering models.
44. We have developed systems for implementation
of the Cross-border Mergers Directive, which allows companies
within the European Community to merge with companies in other
member states.
45. We are working with BERR on the development
of policy on the European Private Company (EPC). Proposals for
a EPC have been around for a number of years. Last year the European
Parliament requested that a proposal be brought forward during
2008. We expect a proposal in late spring or early summer. France
and Germany are keen to move forward with this work and we expect
that France will have the EPC as a high priority throughout its
presidency during the second half of 2008.
What we are achieving with other registries
46. We are one of the biggest registries
in the EU and an active member of the European Commerce Registries
Forum (ECRF). As a member we contribute to and learn about best
practice and ideas from other registries.
47. We are members of the British &
Irish Working Forum, a working group of registries from across
the British Isles and Ireland who share a common legal foundation.
48. We are members of the Company Registers
Forum, which is an association of registries, chiefly from Asia
and the Pacific, concentrating on sharing best practice. The advantage
of the forum is that most of the registries have very similar
legal frameworks to our own.
49. We worked with the Irish Registry on
a Branches Pilot to produce software that automatically sends
electronic notification to a branch registry of the change of
status of the underlying company. This addresses the potential
fraud of companies dissolving but not informing their branch registry
of the dissolution, thus leaving the branch active.
50. We have joined the European Business
Register (EBR), an online service where information on companies
registered across Europe can be found in one place, in a standard
format and language.
51. EBR has set up the Business Registers
Inter-operability Throughout Europe (BRITE) project. Companies
House is not a full member of BRITE but has been a member of the
project's concertation board and has offered to contribute expertise
to its second phase.
Our role in Transformational Work
52. As one of the largest and most important
registries in Europe, Companies House needs to be to be actively
involved, to help maximise the UK's influence. In the short term
we will achieve this through EBR and BRITE, and by continuing
to work with BERR on the development of policy in Europe.
Annex 1
Annex 2
New penalties under the Companies Act
2006
|
| Lateness of delivery | Company
| Company |
|
| Not more than 1 month late | £150
| £750 |
| More than 1 month but not more than 3 months late
| £375 | £1,500 |
| More than 3 months but not more than 6 months late
| £750 | £3,000 |
| More than 6 months late | £1,500
| £7,500 |
|
| |
|
This compares to the current table of penalties as set out
in the existing regime as follows:
Current penalties under the Companies Act 1985:
|
| Lateness of delivery | Private
Company
| Public
Company |
|
| Not more than 3 months late | £100
| £500 |
| More than 3 months but not more than 6 months late
| £250 | £1,000 |
| More than 6 months but not more than 12 months late
| £500 | £2,000 |
| More than 12 months late | £1,000
| £5,000 |
|
| |
|
Annex 3
CHIPS Project | Start Date
| Original Planned Completion Date |
Current Expected Completion Date | Original Planned Cost
| Current Estimated Cost |
Project Contract | April 2001
| April 2005 | | £29m
| |
| Project brought in house | January 2004
| August 2006 | | £30m
| |
| Plan Revision | February 2005
| November 2006 | | £41m
| |
| Plan Revision | January 2007 |
October 2007 | February 2008 |
$48m | £51m |
| | |
| | |
| 
