New Powers Protect Companies From Fraud

New Powers Protect Companies From Fraud

New Powers Protect Companies From FraudSmall firms will be able to take action more swiftly if fraudsters hijack their records at Companies House, following new rules to come into effect on 1 October.

New powers for the Registrar of Companies mean businesses that suspect their records have been tampered with can now contact Companies House directly to ensure the information is corrected, to stop fraudsters from entering into contracts using their company name.

Up to now, firms have had to go through the courts to put a stop to third parties falsifying their records. The change is among the last new processes to be implemented as a result of the Companies Act 2006.

“There has been a steady stream of companies being effectively hijacked, when fraudsters submit statutory forms to Companies House changing the names of company directors,” said the Association of Chartered Certified Accountants’ head of business law, John Davies. “Those ‘directors’ can then enter into contracts with third parties, take the money and run.

“Under the new laws, any company director that thinks information filed at Companies House about their company is forged or inaccurate will be able to submit a form to the Registrar, instead of going to court as they currently have to,” added Davies. “This will speed up the process and make it cheaper. Hopefully it will also act as a deterrent to fraudsters.”

Davies added that company directors must be vigilant, to ensure that they benefit from the new process.

“For this change to be effective, directors need to be alert to the possibility that inaccurate or fraudulent information could be filed about their company,” he stressed Davies. “They should check their records on a fairly regular basis.”

Other legislative changes to come into effect on 1 October include:

  • More privacy for company directors: Company directors will no longer have to publicly file their private addresses at Companies House. Previously, only directors that could prove they were at risk of violence or intimidation were exempt.
  • National minimum wage: The adult hourly rate will go up to £5.80, the development rate will rise to £4.83, and the rate for 16 to 17-year-olds will increase to £3.57.
  • Redundancy pay: The maximum weekly pay that is used to calculate redundancy pay will rise by £30 to £380.
  • Business names: Partnerships and sole traders must comply with the business names legislation introduced in October 2008, which enables any individual or other business to object to their business name if it is misleading or suggests a connection to their business.
  • New ‘default’ articles of association: It will be standard for directors of new companies to be able to make binding decisions outside the board room, for example via conference call or online.

New Powers Protect Companies From Fraud

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