Fines payable by directors for regulatory breaches

24 October, 2012

A recent article about legislation that enables the government to raise the level of fines imposed in Magistrates Courts for ‘regulatory’ criminal offences caused to me recall how widespread these offences have become.  Directors need to be aware that failure to comply with regulatory requirements can result in a Magistrates Court attendance and hefty fine. 

Such offences can be found in various bits of legislation that have an impact on company directors.  This includes the Data Protection Act 1998, the Competition Act 1998 and the Companies Act 2006.  This latter Act is obviously the most important as far as directors are concerned.

Regulatory matters which amount to criminal offences include:

  • failure to notify Companies House of changes in directorships
  • default in filing accounts or annual returns
  • failure to keep a memorandum recording the terms of directors service agreements
  • failure to keep a register of members
  • failure of a director to notify an interest in a contract being entered into by the company
  • failure to keep minutes of board meetings

Some of these are not well known and the obligation, and consequences of non-compliance, may come as a surprise to some directors.

In relation to consequences, each director who has failed to comply can be prosecuted and ignorance of the law is, as always, no excuse!