Tax & Accounting News

Accountants Urge Businesses to Get Up to Date on Companies Act

15/07/2008

London chartered accountants and insolvency practitioners Harris Lipman have urged businesses to make sure they are fully aware of the latest in a series of major changes to company law.

The most recent changes to the Companies Act 2006 – the longest piece of legislation ever passed by Parliament – were introduced on 6 April 2008. The first stages of the act were introduced in January 2007 and additional sections will come into force in October 2008 and October 2009.

Now Harris Lipman senior partner Barry Lewis has warned that businesses may not yet have fully grasped the impact of the latest measures. These include:

• for accounting periods beginning after 5 April 2008, private companies will have nine months instead of ten to prepare and file accounts with Companies House. For public companies, the period falls from seven months to six
• private companies no longer need to have a company secretary
• public limited companies must establish if they are maintaining their minimum share capital in sterling or euros. Previously, only sterling was allowed. The minimum requirements are £50,000 or 65,000 euros
• prior to 6 April, an auditor who negligently audited a company’s accounts would be liable to the company for losses it might suffer as a result. Now the auditor and the company can make a limited liability agreement, under which liability can be limited to a proportion of losses or impose an upper limit
• if the auditor is a firm rather than an individual, the audit must be signed by the person within the firm identified as the senior statutory auditor
• a criminal offence, punishable with a fine of up to £5,000, has been introduced for a person who knowingly or recklessly causes an audit report to contain misleading, false or deceptive material, or omits material relating to problems with the accounts.

Barry Lewis said: “The introduction of these latest changes has been fairly low key and businesses may still not be fully familiar with the new measures and their implications.

“Some complex issues are involved and companies need to be both clear about their options and to prepare for further Companies Act measures being introduced over the coming months. Anyone seeking clarification or advice would be wise to seek the help of a qualified professional, such as an accountant experienced in business issues.”

For more information please contact Harris Lipman on 0208 446 9000.