Companies House clampdown on incorrect filings

Earlier this year, Companies House brought its first conviction against an individual for making false filings on the public register.

In 2013, Kevin Brewer informed Companies House that the Business Secretary, Vince Cable MP, was the shareholder and director of John Vincent Cable Services Ltd (a company he had incorporated) without Mr Cable’s knowledge. In 2016, again without their knowledge, he registered James Cleverly MP and Baroness Neville-Rolfe (the Minister with responsibility for Companies House) as directors and shareholders of Cleverly Clogs Ltd. Brewer’s reasoning for this was to highlight what he perceived to be flaws in the Companies House incorporation procedure.

Brewer pleaded guilty to filing false information at Companies House in March 2018 and was ordered to pay £1,602 in fines and over £10,400 in legal costs. Companies House filings act as a vital tool of legal and financial information and provide a public forum for anyone to scrutinise a business. However, the information on the public register is only as good as what Companies House receives, which can lead to erroneous filings. Grant Usher explains the benefits of ensuring your business gets its filings right and the consequences of getting them wrong.

Why should I ensure the filings at Companies House are correct?

Correct filings demonstrate good corporate governance on behalf of the company and shows that the business is on top of its affairs more generally. In the event of a company sale, the publically accessible information on Companies House will form an important part of the due diligence process. Typically, a buyer will ask the seller to warrant the accuracy of the information submitted to Companies House.

There are additional benefits when companies sign up for the Companies House Web Filing system. Web Filing offers a faster, more efficient and in some cases, cheaper way of submitting Companies House filings online. Submissions can be made in a few clicks which reduces the risk of late filings which could then lead to Companies House sanctions.

Companies House deals with around 50 to 100 cases of corporate identity theft every month. To minimise this risk, there is also an option to sign up to PROOF, a free service which means filings can only be made electronically via Web Filing.

What happens if a filing at Companies House is incorrect?

You may be able to submit a form RP04 in order to correct factual errors but the original filing will still remain on the public register. Note that form RP04 cannot be used for all incorrect filings.

You could apply to court for an order for the incorrect filing to be removed from the public register. The court will consider if the filing is factually inaccurate, was made without the authority of the company, or has been forged. Whilst errors can sometimes be innocent mistakes, occasionally those filings can result in penalties being issued by Companies House and, in extreme cases, criminal prosecution. The Companies Act 2006 makes it a criminal offence for a person to ‘knowingly or recklessly deliver’ a document that is ‘misleading, false or deceptive’. The maximum sentence is up to two years in prison, a fine, or both.

How can Verisona Law help me and my business?

The Corporate & Commercial team at Verisona Law can assist with your company secretarial requirements by:

  • Providing general company secretarial assistance, including preparing and filing your business’ annual confirmation statement (previously annual return)
  • Preparing, and keeping up-to-date, your business’ public register at Companies House including share transfers and appointment/resignation of directors
  • Preparing, filing and keeping up-to-date your PSC registers at Companies House, saving your business time, money and resource
  • Providing training to company secretaries and directors with regards to all company secretarial requirements

If you would like further information about company secretarial requirements, please contact Grant Usher, Associate Solicitor, on 023 9231 2058 or by email to grant.usher@verisonalaw.com.


Corporate

  • Sale and purchase of business, asset and shares
  • Business start-ups and SME’s
  • Management Buy-Outs (MBO’s) and Buy-Ins (MBI)
  • Share buy backs
  • Due diligence
  • Company re-organisation and re-structuring advice
  • Shareholders’ and partnership agreements
  • LLP and Partnership advice
  • Shareholder disputes

Finance

  • Drafting inter-creditor, facility, guarantee and other security agreements
  • Subordination and priority arrangements
  • Advice on personal and corporate guarantees

Commercial

  • Joint ventures and collaboration agreements
  • Terms and conditions of sale or purchase for goods/services
  • Agency and distribution agreements
  • Non-disclosure agreements (NDA)
  • Bespoke trading agreements
  • Intellectual property protection

Company Secretarial

  • Incorporation of limited liability partnerships and companies
  • Creating and/or maintaining statutory registers, minute books and share certificates
  • Preparing board minutes, resolutions and notices
  • Assisting with your annual return
  • Drafting or amending Articles of Association
  • Dissolving or striking companies off the register
  • Implementing changes to your share capital
  • Drafting and filing of Companies House forms.

Dealing with creditors’ demands for personal guarantee payments

The company had substantial liabilities to the bank and its landlord. These liabilities were personally guaranteed, jointly and severally, by both directors.

The bank and landlord both called in the personal guarantees by pursuing our client, rather than the co-director who had little cash or assets. 

As a result our client was required to pay the guarantees totalling tens of thousands of pounds.

Claiming a share of the guarantee payments from the co-director

We were instructed to pursue a claim against the co-director for a contribution of half the amount our client had paid. 

The co-director instructed solicitors to resist the claim, alleging they had little or no involvement or control in the business and so should not have to contribute.         

We built a case based on the detailed consideration of historic company records which demonstrated the extent of each directors’ involvement in the company.  We supplied extensive witness statements and secured the disclosure of financial and other company records relevant to the case.

A number of witnesses also gave evidence at trial. 

Winning and enforcing the claim

We secured a judgment at trial against their former co-director for half of the sum our client paid under the personal guarantees, together with interest and their legal costs. 

Subsequently we took enforcement action to recover payment and, despite the co-director’s limited means, successfully recovered the full sum for our client.

Former Director and Shareholder of Limited Company

"The background to the situation was complicated, yet Verisona Law quickly grasped the essentials and prepared clear arguments with a minimum of wasted time and cost.

Throughout a worrying period, their calm approach allowed me to fulfil my group function with a restored confidence, having been distracted prior to Verisona Law’s appointment by the aggressive and unjustified stance of the Secretary of State.

I have no hesitation in recommending Verisona Law to anyone in a similar position."

Chairman of a group of companies in the construction industry

"I met Mike Dyer, Head of Commercial Law at Verisona, during October 2012 and they were already heavily involved in the bid for ownership of Portsmouth Football Club. Both he and the Verisona team have been an absolute pleasure to work with ever since.

Verisona handled all legal aspects of the takeover and were available to both myself and the bid team 24/7. One of their greatest attributes is their flexibility in working to get the job done. I never once felt that calling during out of office hours was inappropriate, and we would often have conversations at 9, 10 and 11 o’clock at night, as well as weekends.

We have established an excellent working relationship with Verisona. The firm got very involved in all aspects of the takeover, looked after us and truly cared about our success.

I have worked with multiple Commercial Law firms during my 30 year business career and Verisona are by far the best that I have come across.

We have continued to use Verisona as our legal support post-administration and the firm gives us advice and support as we establish PCFC and get to grips with running the Club. Verisona are accessible, approachable, proactive and work very hard to earn their success."

Portsmouth Community Football Club Limited


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