New laws for limited companies

Recent laws dictate companies in the UK must display an unprecedented amount of regulatory information on their websites, faxes and e-mails.

All companies should have listed their place of registration, registered number and registered office address on all their e-documents, business forms and websites.

Companies that neglect their new duties, including those that haven't printed their name on hard copy correspondence, such as bills, invoices and receipts, are at risk from fines.

Where a breach appears to be innocent it is likely that Companies House will choose whether to first warn the company before issuing a fine, lawyers at Browne Jacobsen said recently.

Technology lawyer Richard Nicholas said: "The most likely approach of Companies House is to apply a fine to the most serious breaches of the regulations; for instance, where company details have been fraudulently left off an e-mail."

A legal expert specialising in the freelance industry told CUK that fines may eventually be handed down to non-compliant companies.

But he reassured that while the regulations are new, the Department of Trade & Industry is far more likely to initially issue recommendations on how companies can meet their legal obligations.

"However, if a number of complaints are raised about a company's non-compliance, and if the complainant has actually been damaged in some way by this non-compliance, then a fine will clearly be more likely," said James May of Lawspeed.

The firm stressed that "e-mail communications, faxes and company websites" must now state company information that up to January 1 has only been required on hard copy correspondence and order forms.

Asked about the regulations, which effectively update the Companies Act of 1985, Roger Sinclair, legal consultant at Egos Ltd, said they represented a "storm in a teacup."

Yet he noted an e-mail sent in lieu of a letter would probably count as a 'business letter,' and would therefore be caught by the existing "stationery requirements."

Aside from the need for companies to state their regulatory details on their websites, Sinclair said the "substance of the changes [to company law] is minor," because the new requirements "substantially overlap" duties directors had before 2007.

But for limited company contractors, consultants and freelancers, who work on behalf of client companies - and use their e-mail systems, preparation is vital to bypass the threat of fines.

Brown Jacobsen, which reports that firms have recently enquired about the Companies Regulations 2006, will be advising contractors that, "the sender of the e-mail should make it clear on whose behalf the e-mail is sent, otherwise it is likely to be unclear who is liable for the contents of the e-mail."

"If the e-mail is truly being sent on behalf of both organisations it may be advisable to have to details of both companies on any e-mails to ensure compliance with the regulations," the firm added.

"If however someone is acting in different capacities as representative of different companies, it is worth having different e-mail footers, depending on the capacity in which the e-mail is sent. Otherwise - in addition to the potential for fines under the regulations - the sender of the e-mail may commit the wrong company to a given contract."

Lawspeed said client companies may assume that their self-employed consultants and freelance contractors will take it upon themselves to operate dual e-mail signatures.

"If it is an e-mail communication from 'A Ltd' in its own capacity then…responsibility lies with 'A Ltd' since it is truly a communication from 'A Ltd' albeit through a client's email system - and even though this may be in pursuance of a client project.

"[However] a client is unlikely to want any risk in this respect and may expect contractors using its e-mail system to have a standard email signature that includes all the client's details regardless of the purpose of a specific email," the firm said.

At a glance, the legal duties now facing directors of limited liability partnerships, limited companies and all UK companies are as follows:

The requirement is to show, whether in hard copy, electronic, or any other form, the company's name on:

all the company's business letters, order forms;
all its notices and other official publications;
all bills of exchange, promissory notes, endorsements, cheques and orders for money or goods purporting to be signed by, or on behalf of, the company;
all its bills of parcels, invoices, receipts and letters of credit
on all its websites

And also, on all its business letters, order forms, or any of its websites the following information:

-its place of registration
-registered number
-its registered office address
-and if it is being wound up

More details about the Companies Regulations 2006 can be found via the Companies House webpage, with an onwards link to the regulations.

Friday 23rd Feb 2007