Whether you are a sole trader, SME, large corporation or charity, you need to be aware of your legal obligations regarding the information you need to include on business communications to ensure you are compliant with UK Law. These are known as trading disclosures.
Any form of communication sent from your organisation to the public needs to comply with certain laws, or you and your organisation risk facing not only a fine, but a criminal prosecution.
The purpose of trading disclosure rules is to offer business transparency and to provide assurance to the general public that they have the information they require in order to serve notices on a particular organisation and/or its directors/partners or owner.
Tools of an organisation required to disclose certain information include:
- Cheques and money orders
- The organisation’s premises
So what do organisations have to do to ensure they are compliant with UK law regarding trading disclosures? Read on to find out.
The Companies (Trading Disclosures) Regulations 2008
Coming into force on the 1st October 2008, The Companies (Trading Disclosures) Regulations 2008 (the Regulations) consolidated the rules concerning trading disclosures under one set of regulations pursuant to the Companies Act 2006.
Requirements for Companies and Limited Liability Partnerships (LLP) under the 2008 Regulations
Under the Regulations, a company or LLP must display its registered name at each of its registered offices, and any other location it carries out its business. It also must display its name at any location where records are kept for inspection as required by the Companies Act 2006.
If an office building contains six or more organisations an electronic display may be shown. However, the name must be displayed for 15 seconds each time it appears and must materialise every three minutes.
Business letters, order forms, emails and websites must display the following:
- the company’s full name;
- its registered number;
- the registered office address; and
- the part of the UK where the company is registered.
Other stationary such as cheques and marketing literature etc must also display the company name.
Note: A link to the required information from the company website or an email is not sufficient disclosure to be compliant under the Regulations.
Community Interest Companies (CIC)
CIC are subject to the same rules and regulations as companies and LLPs.
Sole Traders and Non-limited Partnerships
Sole traders and partnership trading disclosure requirements are governed by the Companies Act 2006 (the Act). Under the Act, if the business is trading under a different name than the name of the sole trader or partners (for example, you may have called your business ‘The Kitchen Connection’ but your name is Jane Smith) then your name or all the partners names must be displayed in a prominent position at your business premises.
Exemption for large partnerships
Under s1203 of the Act, a partnership comprising of more than 20 partners does not need to display all the partners individual names, provided that:
- the partnership maintains at its principal place of business a list of the names of all the partners,
- no partner’s name appears in the document, except in the text or as a signatory, and
- the document states in legible characters the address of the partnership’s principal place of business and that the list of the partners’ names is open to inspection there.
If you use a business name, you must include your own name or the names of the partners in clear characters on:
- Business letters
- Order forms
- Invoices and receipts issued
- Demands for payment
A UK address must also be clearly visible to the receiver of the business stationary/communication.
Overseas Companies Trading in the UK
An overseas company doing business in the UK is obliged to make certain trading disclosures in order to be compliant with UK law. These include:
- An obligation for the company to display its name and country of origin at all the locations at which it carries out its business as well as at the service address of all persons residing in the UK who are authorised to accept documents on the company’s behalf
- The requirement to disclose the company name on all business communications, both hard copy and electronic
- The company website, order forms and business letters must also show the company’s registration number, and the country which it is registered in
If the company is not incorporated within a European Economic Area state then it must provide additional information on its website, order forms and business letters including:
- the company’s country of incorporation
- the identity of the registry, if any, in which the company is registered in its country of incorporation
- the number with which the company is registered
- the location of its head office
- the legal form of the company
- if the liability of the members is limited, the fact that it is a limited company, and
- if the company has a share capital, the amount of paid up share capital
Penalty for Non-compliance
Non-compliance with trading disclosure regulations is a criminal offence. Each director can face a fine of £1000.00 if found in breach of the requirements plus a penalty of £100.00 for every days’ delay in meeting compliance.
If you have any questions on trading disclosure then please get in touch with us on 020 3588 3500 or request a call back and we will be in touch with you at your convenience.
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