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The updated filing rules will require private unlimited liability companies that have limited liability subsidiaries (regardless of where those subsidiaries are incorporated) to file financial statements on public record in the Companies Registration Office for accounting periods commencing on or after 1 January 2022. Salvador Nash and Ronan Rock of our Company Secretarial team explain the implications below.

Background

The change was originally introduced by Section 78 of the Companies (Accounting) Act 2017 but its commencement was deferred until 1 January 2022.

Are all unlimited companies in scope?

Currently, private unlimited companies (“ULCs”) are only required to file financial statements in the Companies Registration Office if (i) they are a subsidiary of a limited liability undertaking, or (ii) all the shares in the ULC are held directly or indirectly by a limited liability undertaking. Therefore, in order to determine if a ULC has a financial statements filing obligation, it is necessary to look upward through the corporate chain to see if all the shares in the ULC are owned directly or indirectly by limited liability entities.

For accounting periods commencing on or after 1 January 2022, the scope of those ULCs required to file financial statements will be expanded to include those ULCs that were, at any stage during the financial year, a holding company of a limited liability undertaking. Therefore, in order to ascertain whether a ULC has a financial statements filing obligation for accounting periods commencing on or after 1 January 2022, it will also be necessary to look downwards through the corporate chain to determine if the ULC has (or had during the financial year) a limited liability subsidiary.

ULCs that do not have any limited liability subsidiaries and whose direct and indirect shareholders do not comprise solely of limited liability undertakings will continue to be exempt from the requirement to file their financial statements.

Actions Required

Organisations should take the opportunity to review their group structures in advance of 1 January 2022 to determine if they have any ULCs that will fall within scope of the enhanced filing rules.

If so, steps should be taken to consider the options available for filing financial statements for both the ULCs and other companies in the group. This may involve filing individual entity or consolidated financial statements based on company size thresholds or the granting of a parental guarantee.

Organisations may also wish to give consideration to the benefits (if any) of preserving the unlimited liability status of those ULCs in their corporate group and whether there are any practical or commercial benefits in re-registering ULCs into limited liability entities or vice versa.

Contact us

For consultation on review of group structures, advice on accounts filing options, group reorganisations and re-registrations, please do not hesitate to contact any member of the KPMG Legal Services Company Secretarial Team. We'd be delighted to hear from you.

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