Member Article

One of the functions of Companies House is to make information filed with it available to the public. Staff at Companies House do not question the validity or accuracy of the documents filed and this combined with the ability to freely obtain company details from Companies House can lead to potential fraudsters "stealing" or hijacking a company's identity. Such a fraud took place in 2004 when Companies House forms were, without the company in question's knowledge, lodged by X, a fraudster. These changed the company's registered office to that of X and incorrectly notified of the resignation of the existing directors and the appointment of X as a replacement director. On the strength of the lodged documents X entered into various contracts and even tried to sell the company's main assets. Luckily the true company officials found out about the fraud and acted swiftly to prevent the assets being sold. This example indicates just how seriously the issue of corporate identity theft should be taken. Fortunately Companies House is aware of this threat and has introduced a number of systems to minimise the risk of identity theft, which every company secretary should consider employing. The first mechanism involves the Companies House Monitor Service. This enables the company secretary to "monitor" any documents which have been filed on behalf of the company with Companies House. To use the service the secretary must simply specify the details of the company and documents which he/she is interested in. As soon as the documents in question are received and registered by Companies House the monitor service will notify the company secretary by email. The cost of this service is 50p per company monitored, each request running for a 12 month period, and would allow the company secretary to act quickly if fraudulent documents are lodged. The second mechanism involves the protected on-line filing service ("PROOF"). This enables companies signed up to the service to file specific forms (such as those altering the registered office of the company or advising of the resignation/appointment of directors) electronically. The forms can only be submitted on-line by registered users. If paper versions of the relevant forms are submitted to Companies House they will be rejected and this adds a further element of control to lodging certain forms. The above mechanisms can be beneficial to those seeking to prevent corporate identity theft and should certainly be considered by the company secretary. At the very least every prudent company secretary should check Companies House records regularly to ensure that documents are not being lodged without his or her knowledge.

 

Footnotes: George Boyle is a partner specialising in corporate finance with commercial law firm Shepherd+ Wedderburn +44 (0)141 566 8515