Member News: Online Company Formations: Changes to the Companies House Forms from October 2009
Article Date: 28th Nov 2009
London, UK: The Companies Act 2006 brought about many changes which affected company formations, one of which was the introduction of new Companies House forms. For new company formations this meant a change from the old forms 10 and 12 to the new IN01 form. This change was supposed to make the process of setting up a limited company much simpler to complete and easier to understand. However since October 2009 there have been a number of problems with this change.
The first problem came with the final implementation of the Companies Act at the start of October. Companies House experienced severe delays with their incorporation applications. Official figures show that almost 20% of incorporations in October did not meet the Companies House target of completing 95% of incorporations within three days. In the new form not only require an update of the Companies House systems, but all company formation agents who have a directly electronic gateway with them.
A further problem with the new IN01 form was that of guidance, especially with regards to statement of capital.
Andrew Millet, Director of Wisteria Formations explains: “One of the big mysteries of the new IN01 form is the need to include a statement of capital. This in itself is difficult for some companies where share allocation or share rights are highly complex. In addition there was no real guidance available to indicate exactly how this statement should be constructed. Companies House offer no guidance on this matter when contacted and refer you to the ICSA (Institute of Chartered Secretaries and Administrators). The ICSA have offered a guidance note on this issue; however they spend most of it highlighting an issue the IN01 form has with share premium. I think that it is fair to say that these issues have still not been fully resolved”
The ICSA states “The Department of BIS will, in the longer term, review whether a change to Companies House forms or the Companies Act 2006 is necessary”. This suggests that the Companies Act 2006 has not met its target of making the administration of businesses easier and means that further changes may occur in the future, which in turn will mostly likely again disrupt the normal course of business.
Individuals looking to start a company will need to carefully consider these points before proceeding with the application to form a company. In the circumstances, individuals may be best advised to speak to their online company formation agent, lawyer or accountant to seek their view on this issue.
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