Thousands of businesses 'being freed from red tape'
The Government says thousands of firms are being freed from red tape as result of its campaign to reduce business regulations.
The interim results from the Company and Commercial Law Red Tape Challenge show that half of the 115 regulations affecting the day to day running of businesses and filing of accounts are to be scrapped, merged or simplified.
Some of the main areas being covered include:
- Reform of the company and business names regime. Proposals include removing certain names from the list of words which require approval from specified bodies before being registered at Companies House. The list of 161 words and expressions contains, amongst others, examples such as; ‘Accredited’; ‘British’; ‘Group’; ‘International’; ‘Benevolent’; ‘Holding’; ‘Institute’; and ‘University’. Of course some names will still need approval such as those which may cause offence.
- Measures to simplify the regulations a company must abide by when displaying the company name at their premises, on paper or online. Currently, companies must display their registered name at their registered office, and all other business premises, and on all business documentation. The proposal will enable them to find all the rules together in one place.
- Proposals for companies with fewer than 10 employees (micro-businesses) to be freed from red tape by removing certain accounting requirements. Under the micros exemption proposal, micro-businesses would be able to prepare much reduced annual accounts. There are 1.2 million micro-businesses in the UK and they will be able to draw up shortened balance sheets and profit and loss accounts and will remain exempt from the requirement to file the profit and loss account.
- Other amendments to the Companies Act which will simplify the system for companies to use assets to raise finance, streamline company annual reporting requirements and repeal certain filing obligations when companies change their auditors.
Ministers say that the Red Tape Challenge is already saving businesses more than £155m a year. So far, 1,400 regulations have been earmarked for scrapping or for being substantially reduced.
The Head of Corporate Governance at the Institute of Directors, Roger Barker, said: “Although the Companies Act 2006 consolidated and simplified many aspects of legislation and case law, it still remains largely the province of corporate lawyers and other specialists.
“With that in mind, we welcome the Government’s plans to develop straightforward and user-friendly guidance for directors, which will allow them to better understand important company documents, such as the articles of association, and their key legal responsibilities as company directors.”
Please contact Sarah Liddiard if you would like more information about the issues raised in this article or any aspect of business regulation.