Contractors who use a limited company to run their contracting business will already have experienced some of the changes resulting from the Companies Act 2006, which completely updated and modernised 150 years of company law.
The final phase comes into force on 1 October 2009, with those measures most likely to have an effect on contractors including:
- An easier incorporation process
- Changes to all the standard forms
- Increases in the Registrar of Companies’ powers
- Directors’ service addresses and company register addresses
- Changes to the rules about limited company names
- A ‘Statement of Capital’.
In addition to these, new contractor limited companies incorporated from October 2009 should adopt model Articles of Association.
Most contractors will find that their accountants will be on top of any changes that may be required. But those contractors who handle their own limited company paperwork administration, or who want to act on the changes themselves, for example by making their home address confidential, need to be aware of what the changes mean.
Limited companies are easier to start
Contractors thinking of changing their trading vehicle and setting up their own contracting limited company will now find the process much easier. A new limited company already only needs one director, who has to be a person rather than a company, and no longer requires a company secretary. Now the paperwork is much simpler, too, with only a short memorandum of association and a set of model articles of association. Not only that, but issuing shares in the company will also be easier.
Standard Companies House forms have changed
Contractors who choose to file their own limited company paperwork, rather than leaving it to their accountant or company secretary, and who don’t use the web filing service, must only use the forms introduced in October 2009. Contractors who still use old templates, or company secretarial software based on the old forms, may find their paperwork is rejected.
New powers for the Registrar of Companies
Most contractors will not be aware that the Registrar of Companies exists, much less what powers the Registrar holds. And that’s because the majority of limited company contractors don’t need to know, as their accountant will handle their company paperwork. But those contractors who file their own documents with Companies House should understand that the Registrar has a range of new powers over what documents can be accepted, rejected and amended.
Directors’ and companies’ addresses
For the vast majority of contractors who are also directors of their contracting limited companies, the good news is that their home address no longer has to be in the public domain. A contractor director can opt to have a ‘Service Address’, which can go on the public record, allowing their home address to remain confidential.
Companies can now opt to hold their company registers, or formal records, at an alternative address to the registered office. This is called the Single Alternative Inspection Location, which is handy if the registered address is a contractor’s home and they prefer to keep their company records with an accountant or solicitor.
What’s in a company name?
Contractors whose ‘cherished’ company name is already taken will find that Companies House has got stricter on attempts to add endings like ‘GB’, ‘Services’ or ‘.com’ to make the name new. There are also new rules about changing company names, so contractors should check with their accountant if they are looking to incorporate a new company or rename an existing one. For limited company contractors who handle their own company paperwork, they should check the new rules on the Companies House website.
As with other aspects of running a limited company, the buck stops with the director/s, so contractors should ensure they have a reasonable grasp of what the October 2009 changes to the Companies Act mean for them and their company.
Completing a ‘Statement of Capital’
All new contractor limited companies will have to complete a newly introduced Statement of Capital, which provides a snapshot of the capital structure and shareholdings of the company at a given time. Although for most contracting limited companies the capital structure will be quite simple, contractors might want to get advice from their accountants about how to prepare the statement, or let their accountant prepare it on their behalf. Existing companies will have to prepare a statement of capital when submitting their first annual return after October 2009.
The Companies Act 2006 also introduces new rules on Changes of Constitution, Voluntary Dissolution and more obscure requirements, like Slavenburg Charges, but the vast majority of contractors will be unaffected by these.
If in doubt, contractors should check that their accountant has made any necessary changes, or if they handle their own limited company paperwork, read the guidance on the Companies House website.
As with other aspects of running a limited company, the buck stops with the director/s, so contractors should ensure they have a reasonable grasp of what the October 2009 changes to the Companies Act mean for them and their company.
Published: Thursday, October 01, 2009
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