Companies Act 2006: statements of capital - consultation on financial information required

The last tranche of provisions of the Companies Act 2006 was commenced on 1 October 2009. Among the changes introduced then was a new ‘statement of capital’ - a snapshot of a company’s share capital that must be produced at various stages in a company’s life-cycle, including each year in its annual return.

In the summer of 2009, it became clear that for certain companies, it could be difficult to comply with one of the requirements of the Act for financial information in the statement of capital. We published an FAQ on our website acknowledging the problem, and undertaking to consider and consult on how to resolve it.

This consultation sets out proposals for amending the requirements that balance the interest of third parties in obtaining information with the cost to the company of supplying it.

The purpose of the consultation is to seek input on whether our assessments of the availability and value of information are accurate, and on our proposed options for changes in the information to be required.

The government has considered the scope to simplify the financial information requirements in Companies Act statements of capital which were the subject of the consultation. We have also considered concerns, raised by stakeholders but not covered by the consultation, that the requirements to set out the prescribed particulars of the rights attached to shares in statements of capital are particularly costly and duplicative.

The government believes that there is a good case to simplify the financial information requirements for all companies, in all statements of capital, except those required on formation and in the Annual Return, to require the following information:

• the total number of shares of the company
• the aggregate nominal value of those shares
• the aggregate amount unpaid on those shares (whether on account of nominal value of the shares or by way of premium)
• the total number of shares in each class
• the aggregate nominal value of shares in each class
• the aggregate amount unpaid on shares in each class (whether on account of nominal value of the shares or by way of premium)

At the same time we believe there is scope to simplify the information requirements on the rights attached to shares to address the issues companies have raised.

For many of the 15 instances where a statement of capital is required, including the Annual Return, the Companies Act 2006 contains a power for the Secretary of State to amend the requirements by statutory instrument. But for a number of others there is no such power. After carefully weighing the arguments, we have concluded that the changes to statements of capital should be introduced simultaneously to minimise further confusion for companies. The government will therefore bring forward detailed proposals as soon as a suitable legislative vehicle is available.

We had previously considered making earlier changes to the requirements in the statement of capital in the Annual Return. However, a further assessment has shown that, in order to reduce burdens and complexity for companies in a way which is cost effective for Companies House and for businesses providing web-filling and software filing services, changes to requirements in statements of capital should be made simultaneously, and apply across the board to all instances in which such statements are required.