Reforming the Law Concerning Oversea Companies
ACCA's response to the Department of Trade and Industry's Company Law Review Steering Group's Consultation Document 4, of the above title, is set out below.
In our view, the separate compliance regimes for different types of oversea companies that conduct business in the UK constitute one of the areas of the Companies Act that are most in need of rationalisation by the review project. The current arrangements, whereby two different regimes exist side by side, are unsatisfactory for all concerned. From the perspective of oversea companies themselves, there is unnecessary confusion as to which of the two regimes they should be subject; from the perspective of the law, there is a lack of clarity as regards the features of each regime; from the perspective of those doing business with an 'oversea' company, there is the confusion as to which set of rules apply to it and the consequence of this on the procedure for finding out information on its affairs.
Accordingly, we fully support the proposal that Part XXIII should be re-structured so as to create an integrated compliance regime for oversea companies.
Our comments on individual questions posed in the Consultation Document are as follows:
1. We believe that the 'place of business' concept is a feasible basis for the new definition of oversea company. The definition should, however, make clear that it encompasses any place where a company purports to conduct business.
4. Yes.
5. We believe that, under the proposed new regime, the standard rule should be that all companies which are deemed to be oversea companies should file accounts which are prepared on the same basis, so as to create a 'level playing field' of disclosure. This uniform regime would certainly apply even where the company concerned was not required to prepare accounts in its home state. We would favour a single disclosure framework, for all companies, along the lines suggested in Annex 3 of the Document. The advantage of this approach would be that it would be standardised, so that any oversea company would prepare and file accounts in the UK on the same basis and in accordance with rules set by the UK rather than by any other country. The standard 'oversea company' accounts should be required of all but those companies that are based in the EU: these latter would be allowed to file the accounts that they have prepared in accordance with the requirements of their home state.
8. Yes.