Extension of various time periods for providing information to registrar
May 27, 2020
The Corporate Governance and Insolvency Bill (‘the Bill’) was given its first reading on Wednesday 20 May 2020. The text of the Bill can be found here, with explanatory notes which can be found here. The Bill, if passed will implement some long-awaited changes to the UK insolvency regime, and at the same time, effect a range of temporary measures to assist with corporate governance during the Covid-19 pandemic.
As has been previously reported in the Exchange Chambers commercial e-bulletin, a key objective of the Bill is to provide companies with the flexibility and breathing space needed to continue trading and comply with their continuing legal obligations during the Covid-19 pandemic. As discussed in more detail in the commercial e-bulletin, the Bill introduces a number of measures to provide companies, and other qualifying bodies, with temporary relaxations of certain obligations, along with a package of permanent reforms.
From 26 May 2020 members of Exchange Chambers’ Restructuring and Insolvency team will be producing a dedicated series of daily e-bulletins that will consider in detail the impact of the various reforms introduced by the Bill. With the first article dedicated to the ‘Temporary suspension of liability for wrongful trading’, authored by Anja Lansbergen-Mills.
This second bulletin considers the various extensions for providing information to registrar afforded by the Bill.
Companies and other entities have many obligations in relation to filing accounts, reports, and notices under the (i) Limited Partnership Act 2000; (ii) Companies Acts 2006 and 1985; (iii) Limited Partnerships Act 1907; and (iv) Regulation 80C of the European Public Limited-Liability Company Regulations 2004 (S.I. 2004/2326). Under these regulations, businesses have a duty to notify the registrar, and deliver to the registrar, any notices, changes, and/or alterations impacting the business.
The regulations themselves vary in respect of the obligations, and period of time for filing, as do the various sanctions that can be imposed upon the partners and/or directors – therefore, it remains prudent for those responsible to review the relevant sections (as detailed below) to identify the obligations imposed upon them in respect of updating the registrar.
Whilst extensions of time have already been offered to companies and other entities, section 37 of the Bill provides that the Secretary of State may by regulations provide that any provision listed in section 38 may have their ‘existing period’ for providing information to the registrar substituted for a longer period as specified in the regulation. Section 37 applies to: Companies; European Economic Interest Groupings; Limited Liability Partnerships; Limited Partnerships; Overseas Companies; Societas Europaea; Unregistered Companies; and, Scottish Qualifying Partnerships who are required to file certain documents, or in respect of whose assets an interested person wishes to register a charge with the registrar at Companies House. Section 38 lists the provisions referred to in subsection (1) of section 37 and allows for certain deadlines to be extended. These deadlines include:
i) Periods for filing accounts;
ii) Periods for filing confirmation statements;
iii) Time allowed to notify the registrar of certain relevant events that are covered by the confirmation statement, for example notifying the registrar of a change in director;
In addition to the above, the regulations may also extend the deadline for registering a charge with Companies House.
Subsection (2) of section 37 contains the maximum time periods which may be substituted for the existing periods for the filings. The extended period for filing must not exceed:
i) 42 days, in a case where the existing period is 21 days or fewer; and,
ii) 12 months, in a case where the existing period is 3,6 or 9 months.
The temporary measures provided for in section 37, cover the following provisions as detailed in section 38:
i) Section 9 of the Limited Partnerships Act 1907 (registration of changes to a limited partnership);
ii) Section 466 of the Companies Act 1985 (registration of alteration to a floating charge);
iii) Section 9 of the Limited Liability Partnerships Act 2000 (notice of membership changes);
iv) Regulation 80C of the European Public Limited-Liability Company Regulations 2004 (S.I. 2004/2326) (notice of change in members of the supervisory organ);
v) the following Sections of the Companies Act 2006—section 87 (notice of change of address of registered office);
- Section 114 (notice of place where register of members is kept);
- Section 162 (notice of place where register of directors is kept);
- Section 167 (notice of change in directors etc)
- Section 275 (notice of place where register of secretaries is kept);
- Section 276 (notice of change in secretaries etc);
- Section 442 (period allowed for filing accounts);
- Section 790M (register of people with significant control);
- Section 790N (notice of place where PSC register is kept);
- Section 790VA (notice of change to the PSC register); section 853A (1) (confirmation statements);
- Section 859A (registration of charge);
- Section 859B (registration of charge contained in debentures);
- Section 859Q (notice of place where copies of instruments creating charges are kept);
Section 37 is silent as to the financial and/or criminal sanctions under these regulations. Accordingly, a person guilty of failing to adhere to the specified, or extended time period under the relevant regulation will remain liable for the various sanctions imposed by such regulation. In that regard, even though government has made these proposals within the Bill, businesses should look to adhere to the specified period within the relevant regulation, or be prompt in making an application for an extension – so as to avoid any form of criminal or financial sanction being imposed in accordance with the relevant regulation.
Section 37 subsection (1) enables the Secretary of State to make regulations to extend the time period which a company, or other entity (as specified above) has to provide the registrar with the appropriate filings. This essentially means that businesses will be given additional time to update the registrar to help avoid penalties, whilst also acting as a means to recognise the difficulties businesses may face in meeting existing statutory deadlines due to Covid-19. The government intends to hurry these changes through, which are necessary to support struggling business as they continue to deal with the economic impact of Covid-19.
If businesses affected by coronavirus require more time to update the registrar, they should act before the filing deadline – meaning, the business should take appropriate measures to ensure it updates the registrar on time, or makes an application to extend the period allowed for updating the registrar. In circumstances where an extension is not applied for, and the filing is late, an automatic penalty will be imposed in accordance with the relevant regulation. It ought to be noted that the registrar has very limited discretion not to collect a penalty and given the fact government is looking to implement these temporary measures it is unlikely any such discretion will be exercised in these circumstances.
The legislation is long and complex, as such this, and our related bulletins aim to provide a summary analysis of the legislation, which attempt to answer some of the immediate questions that are likely to arise.