The Corporate Insolvency and Governance Act: What it means for businesses

On 25th June, the Corporate Insolvency and Governance Act became law. This is another element of the government’s strategy to support businesses that are struggling during the COVID-19 pandemic. These new legislative measures are intended to further relieve the burden on companies during the outbreak so that they can concentrate on the measures they need to take to keep their businesses afloat.

What will the Act mean for businesses?

The coronavirus pandemic has had a very significant and disruptive effect on the economy and society and businesses need all the support they can get during this time. The Act, therefore, will introduce the following measures:

• An automatic extension for confirmation statements, event-driven filings and registrations of mortgage charges, and more time for most companies to file their accounts.

• More flexibility around when and how to hold Annual General Meetings.

• Changes to the insolvency regime that will give companies breathing space to increase their chances of survival.

• A temporary suspension of parts of insolvency law to help directors of companies in financial difficulty.

Filing deadline extensions

If a company has a filing deadline that falls between 26th March 2020 and 29th September 2020, it will be extended by Companies House to either:

• 30th September 2020, or

• 12 months from the end of the company’s accounting period,

whichever is earlier.

If the filing deadline occurred between 26th March 2020 and 26th June 2020, Companies House will extend the deadline retrospectively.

If a company had a filing deadline between 26th March 2020 and 26th June 2020 and is in default for not filing accounts, it may no longer be in default when the filing deadline is moved. If this is the case, the company must file its accounts by the new filing deadline or it will return to a state of default.

If a company had a filing deadline between 26th March 2020 and 26th June 2020 and it filed its accounts late, the late filing penalty will be reviewed by Companies House and the company will be contacted if the penalty turns out to be incorrect.

This is only temporary and companies should be aware that filing deadlines falling on or after 6th April 2021 will not automatically be renewed. Therefore, if a company’s filing deadline falls on or after 6th April 2021, it must apply for an extension in the usual manner.

Confirmation statements

Currently, companies have a deadline of 14 days to file their confirmation statements with Companies House, but this will now be extended to 42 days. Those covered by the extension will include:

• Companies

• LLPs

• Scottish limited partnerships (SLPs)

• Scottish qualifying partnerships (SQPs)

• SEs (Societates Europaeae - a public company registered in accordance with the corporate law of the European Union)

This extension does not have to be applied for; it will take effect automatically.

The extension applies to the time allowed to file the confirmation statement at the end of the review period (the period covered by the confirmation statement). Since it does not alter the review period, there should be no amendment of the confirmation date on the statement.

Because this measure is temporary, the deadline extension will not apply if the end of the review period happens on or after 6th April 2021.

Event-driven filing

When certain events take place or a company’s status changes, notification has to be filed with Companies House.

The Act now gives more time for companies to do this. That includes any changes that the company has to file so that the company record is updated before the confirmation statement is filed.

The period will increase to 42 days.

Again, where the deadline for filing occurs on or after 6th April 2021, there will be no extension.

Mortgage charges

The period allowed to deliver the particulars of a charge to Companies House will increase by 10 days. At present, a person with an interest in the mortgage charge must deliver their documentation to Companies House within 21 days but under the Act, this will now increase by 10 days.

If a charge is created on or after 6th June 2020, the period to deliver it will automatically increase to 31 days and will begin the day after the charge was created.

This additional 10-day period will apply to charges for:

• Companies

• LLPs

• SEs

• EEIGs (European Economic Interest Grouping)

• Floating charges in Scotland will also be covered by the additional 10-day period.

rradarstation

Looking for more advice or guidance on this matter, or any other business-related issue?

rradarstation gives you 24/7 access to guidance, videos and on demand webinars answering frequent questions and downloadable templates to use in the day-to-day running of your business, each written and verified by our legal professionals. You will find the answers you are looking for at rradarstation.