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Annual Returns for Companies House – (or How to Confuse Directors)

21st January 2010

The new Companies Act 2006 was introduced after much consultation and fanfare as the way in which company law would bring companies into the 21st century.

Most of the existing legislation was written back in the days of the quill pen and it was generally accepted that it needed updating. It was also accepted that small companies that form the vast majority of companies registered with Companies House suffered unduly from excessive administration in relation to the requirements of that old-fashioned legislation.

It would therefore be quite reasonable to expect that, as every company has to file an Annual Return, the new Annual Return would be ;

• easy to understand,
• easily completed,
• with good guidance,
• and completion online.

One out of four (online completion) is not very good!

The new Annual Return (form AR01) came into effect from 1st October 2009 for companies completing a return with a made-up date of 1 October 2009 or later. Most companies that have been around for more than a year had all their data regarding directors, registered office, shares etc on the Companies House website already and were used to filing online. It is a fairly basic form, so how difficult can it be?

One of the first questions asks whether you are a ‘traded company’. I suspect many directors would answer ‘yes’ – we are not dormant so are trading. Closer inspection of the guidance shows that you should be answering ‘no’ as a traded company is one in which its shares are publicly traded on the stock markets.

You then have to answer whether you have a SAIL address. This is a Single Alternate Inspection Location. I foresee some blank faces but if you ignore the question it goes away, which is probably the right answer.

Next, you are required to confirm the addresses of directors. Same as before you might think. But if you confirm that, you are confronted with an error message saying that you need to enter the Country of Residence. You need to enter when you changed your Country of Residence as well. ‘But I haven’t’ you might say, but you cannot progress without giving a date on which you did move, even though you have not! It seems safest to use the same date as the made-up date for the Annual Return.

You are then given a number of options for Country of Residence. The most popular options are;

• United Kingdom
• England (seems to be the safest choice, if you do live in England)
• UK
• Great Britain

At this point you may also catch sight of notes asking whether you are an EEA Company, or maybe a Non-EEA Company? Don’t worry as these do not apply but it is a little tricky to know that they do not apply without reading the First Company Law Directive (68/151/EEC). Don’t have that to hand? – ignore the note, that is easiest.

On to Capital : Update/Amend. That is ok, share capital and shareholders are the same as last year, so this section must be easy, right? I am afraid not. You are asked to free-type the ‘Prescribed particulars of rights attached to the shares’. I wonder how many directors of small companies know these rights?

Most companies operating with ordinary shares will be safe with the following answer;

‘Fully voting, fully participating, non-redeemable shares’

I hope the above allows you to get through your Annual Return, if you are due to make one.

It is disappointing though, that a simplification exercise immediately makes things, more difficult and confusing.

The most likely correct answers are shown above in bold but do give it some thought.

If you do have problems with the completion of your Annual Return, Carrington will be happy to give guidance on 020 7324 6020.

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