2010 to 2015 government policy: company law reform
Updated 8 May 2015
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This publication is available at https://www.gov.uk/government/publications/2010-to-2015-government-policy-company-law-reform/2010-to-2015-government-policy-company-law-reform
This is a copy of a document that stated a policy of the 2010 to 2015 Conservative and Liberal Democrat coalition government. The previous URL of this page was https://www.gov.uk/government/policies/modernising-company-law–2 Current policies can be found at the GOV.UK policies list.
Issue
Business regulations are necessary to protect the public and workers from safety risks and prevent pollution and environmental damage, but they can also stop businesses from reaching their potential.
The government wants to reduce the number of unnecessary regulations that hold back businesses while ensuring that both workers and the public are protected.
Actions
The government is:
- simplifying accounting and auditing for small companies
- negotiating with the European Union to make accounting regulations more business friendly
Background
The implementation of Companies Act 2006 was completed in October 2009 and made many changes to simplify and improve company law.
Appendix 1: simplifying accounting and auditing for small companies
This was a supporting detail page of the main policy document.
Small companies face disproportionally high costs in both money and resources for statutory auditing. This can be a major obstruction to their growth.
The government wants to reduce this burden on small businesses by increasing the number that are exempt from statutory auditing.
In September 2012 government made regulations allowing more companies to make a commercial decision as to whether or not to have a statutory audit, the Companies and Limited Partnerships (Accounts and Audit Exemptions and Change of Accounting Framework) Regulations 2012. These came into effect in October 2012.
The regulations mean that small companies can be exempt from statutory audits if they meet 2 of the 3 conditions on the size of their balance sheet, turnover or number of employees.
The regulations also exempt most subsidiary companies as long as their parent companies take on their liabilities.
We have published our response to the consultation we commmisioned on the change of regulations Response to the Consultation on Audit Exemptions and Change of Accounting Framework
Appendix 2: negotiating with the EU on accounting regulations
This was a supporting detail page of the main policy document.
The smallest businesses face the highest cost when it comes to complying with regulation, so government wants the EU to reduce the amount of regulation that micro, small and medium sized businesses have to deal with.
The European Commission has adopted the policy of ‘think small first’ that gives micro, small and medium enterprises more exemptions to regulation and lighter regulations designed to make things easier for them.
The Commission has run 2 programmes to improve existing legislation:
- a programme of simplifying, updating and consolidating EU law - around 200 proposals have been adopted
- the Administrative Burden Reduction Programme that has reduced administrative cost from EU legislation by 33% - well beyond EU’s 25% target
We are working with departments to make sure that the Commission continues to reduce regulation to micro, small and medium enterprises as set out in its Administrative Burden Reduction Programme