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by the Company Law Reform Study Group |
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To: Re: COMPANY LAW REVIEW: TRADING DISCLOSURES We wish to make only one objection to the disclosure requirements in your paper and that is to your statement that "in our view, it is essential that every company’s name be displayed at its registered office". Over the last 20 years great swathes of our inner cities, particularly Victorian and Edwardian residences, have been converted into flats, held on long leases with the freehold of the building held by the lessees through the medium of a limited company whose only shareholders are the lessees of the flats. Most of the companies do not "carry on business". Their formation was forced by the peculiarities of English property law. Solicitors have been advising purchasers of long leases to acquire the freehold in this form for many years, as the only alternative is complicated and expensive. According to the Companies Registry "a large number of companies on our register are classed as 'flat management companies'". Your proposal would require these companies to display registered office notices on the exterior of the building, something generally prohibited by the leases they have granted, to the detriment of the appearance of the property and giving to the public the belief that a business is being carried on at the premises - also generally prohibited by the leases. Recent and proposed legislation relating to small companies have been to simplify and deregulate. Your proposal does the opposite, resulting in unnecessary costs and misleading notices. The Companies Registry has sensibly advised those companies to organise their affairs so as to be treated as dormant; your proposal does not even exempt dormant companies. The answers to your questions 1, 2 and 10 is therefore "Yes, but only if Flat Management Companies, whose ownership is limited to lessees of the flats in the building of which the company is the freeholder, are exempted". Louis Manson
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