Financial & Legal News

Company and commercial law reforms to reduce red tape

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For the next three weeks, the latest phase of the Red Tape Challenge will focus on more than 120 company law regulations, guidance and enforcement processes that businesses deal with on a daily basis.

The campaign asks for a variety of suggestions about how regulations can be improved, simplified or abolished, whilst maintaining a company law framework that gives companies the flexibility to compete and develop effectively. 

Examples of areas open for comment include:

Internal workings of companies and partnerships: Rules on shares and share capital, requirement to hold information at business premises and rules on meetings and resolutions. Accounts and returns: The content, form and auditing requirements of financial accounts and other reports. Business names: The rules covering company names. Disclosure of company information: The regulations covering the information companies must supply to the official register.

Business Minister, Edward Davey said: 

"We want to have a flexible regulatory framework within company law to allow firms to compete and grow successfully. The Red Tape Challenge is a great way for the public and firms to tell us what is a nuisance or gets in the way of doing business effectively. 

"The feedback we receive will allow us to build on the Companies Act 2006 to look at areas such as the audit regime to assist small and medium sized companies as well as the approach to filing documents at Companies House. I am open to new ideas to simplify, merge or discard additional rules that will enable firms to do business with more confidence."

Head of Corporate Governance at the Institute of Directors, and company law sector champion, Roger Barker said: 

"The Red Tape Challenge is an excellent opportunity for companies to get their voice heard and help inform government thinking and policies. Companies need to spend time on doing business, creating jobs and growing, not spending time filling in forms for no good reason. 

"We must be sure that regulation is proportionate and that the company law framework protects companies and their creditors whilst minimising red tape and making the running of a company as simple as possible. I look forward to seeing some new and exciting proposals from business to help inform this important work."

Chartered Accountant at Baker Tilly Tax and Accounting Ltd, and company law sector champion, Danielle Stewart said:

"I am very excited by the opportunity to be an official Red Tape Challenge Champion, because I have been deeply involved in the development of better, more appropriate regulation since the early 90´s. As a practicing Chartered Accountant, I have often seen smaller businesses in particular struggle with the weight and complexity of bureaucracy applicable to them. 

"Here in the UK, we have led the world in the development of differential accounting standards; we already have a think small first´ approach to Company Law embodied in the 2006 Companies Act. Against this backdrop, The Red Tape Challenge represents an opportunity to go the final mile towards ensuring that every aspect of regulation applicable to UK companies is necessary, appropriate and is as efficient as it can be."

The Government has today published a discussion paper to coincide with the start of the spotlight period, seeking views on proposals and calling for further suggestions for improvements. 

The results of the Red Tape Challenge for company and commercial law will be published later this year. 

Please note that the information and opinions contained in this article are not intended to be comprehensive, nor to provide legal advice. No responsibility for its accuracy or correctness is assumed by Pearson Solicitors and Financial Advisers Ltd or any of its members or employees. Professional legal advice should be obtained before taking, or refraining from taking, any action as a result of this article.

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