Thousands of small companies could soon be able to look forward to life without the annual statutory audit if the government acts on proposals to modernise company law.
In its final report, published last week, the company law review steering group recommended the abolition of the compulsory audit for companies with a turnover of #4.8m or less.
After three years’ consultation, the steering group has recommended an array of changes intended to lift the weight of legislation on small privately owned companies, as well as improving the lot of large listed companies.
Trade and industry secretary Patricia Hewitt said: ‘British company law used to be the best in the world. It is not anymore.
‘This is our opportunity to bring company law from the 19th century to the 21st and to give Britain the best regime of company law in the world.’
She added that 95% of UK companies have fewer than 50 employees, but they still find themselves caught up in a jungle of company law.
‘They bear unnecessary costs in order to comply with the company law regime. We want to make it easier for them to do business in the UK,’ she said.
Other recommendations of the review include the simplification of the format for small company accounts, although this is countered by the banning of abbreviated accounts. Also proposed is a cut in the limit for filing accounts – from ten months after the financial year-end, to seven.
Small companies should no longer have to hold annual general meetings or lay accounts in general meetings, or appoint a company secretary, suggests the steering group, which consisted of government, legal and business representatives.
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