What Offences Can A Company And Its Directors Commit ?
by Liz Seyi Digital marketing managerThe
Companies Act 2006 is the legislation that forms the primary source of UK
company law and dictates the corporate governance and compliance efforts of a
wide range of UK organisations. It is therefore crucial for companies and their
directors to be well informed on the offences that could inadvertently be
committed under this Act.
Non-compliance
with some of the Act’s provisions may create summary offences relating to
comparatively minor defaults, usually involving failures to notify the
Registrar of Companies of matters that impact on the company and its
constitution, or to provide information to shareholders. Non-compliance with
certain other provisions of the Act, however, may create serious crimes, mostly
relating to fraud.
There
is not always a clear distinction between these two categories, given the scope
for minor irregularities and defaults to also frequently be associated with
more serious crime. An example of this could be where the improper maintenance
of accounts or records serves as a means of concealing fraudulent trading or
unlawful dealings with directors.
Selections
from the Companies Act 2006 schedule of offences
The
list of offences that may be committed by a company and its directors under the
Companies Act 2006 is a long one. These include, but are not limited to, under
the category of ‘summary only’:
- Failing to send the registrar a
copy of amended articles
- Failing to forward resolutions
or agreements affecting the company’s constitution to the registrar
- Failing to give the registrar notice
of changes made to the company constitution by court order
- The company amending its
articles so that it ceases to be exempt from the requirement to have the
word “limited” in its title
- Failing to keep a register of
members and their particulars
- Failing to properly keep a
register of directors containing requisite information
There
are also certain offences in the schedule of offences that can come under the
category of either ‘summary only’ or ‘trial on indictment’. Some
examples of these include:
- Failing to hold annual general
meetings for a public company, or as required by the articles or the
members in the case of a private company
- Failing to prepare a strategic
report
- Failing to comply with the
approval and signing of the directors’ report and accounts
- Failing to send out copies of
reports to those entitled to receive them
The fines and sentencing powers applicable under the Act
On
summary conviction for offences committed under the Companies Act 2006 after 12
March 2015, an unlimited maximum fine applies. The maximum fine is also
unlimited in instances of conviction on indictment. Furthermore, a court is
required to impose a victim surcharge.
With regard to sentencing powers:
- Section 78 of the Powers of
Criminal Courts (Sentencing) Act (PCCASA 2000) specifies the maximum
imprisonment powers: a magistrates’ court shall not have power to impose
imprisonment exceeding six months in respect of any one offence
- Also specifying the maximum
powers of imprisonment is section 224(1) of the Sentencing Act 2020, which
sets out that a magistrates’ court does not have power to impose
imprisonment for more than six months in relation to any one offence
- Paragraph 24 of Schedule 22 to
the Sentencing Act 2020 amends section 224(1), substituting 12 months for
six months
- Section 1131 of the Companies
Act 2006 deals with the transitional provision.
What about personal liability claims?
Finally,
directors can also be at risk of any of a range of claims for personal
liability arising from wrongdoing in their management of the company. Examples
of such claims can include:
- To the company for breach of
the directors’ general duties under the Companies Act 2006 or for wrongful
trading under the Insolvency Act 1986
- To third parties, such as an
investor for misrepresentation
- To employees for discrimination
under the Equality Act 2010
- Under legislation that imposes
personal liability on directors, such as health and safety legislation,
environmental legislation, the Bribery Act 2010, the Corporate
Manslaughter and Corporate Homicide Act 2007, and the Financial Services
and Markets Act 2000
- For costs incurred in the
defence of civil, criminal or regulatory proceedings
Contact
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book maintenance?
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Created on Jan 7th 2022 00:47. Viewed 117 times.