Failing to prevent fraud and other criminal offences for company directors under the Companies Act 2006

Most company directors have at least a broad appreciation that their role involves various legal duties, such as the duty to file/update certain information with Companies House.

What’s less well-known is that the Companies Act also provides that a criminal offence is committed by directors should they fail to comply with a wide range of their obligations. 

In the vast majority of these cases, the successful prosecution of an offence is punishable by a potentially substantial fine.  

Prosecutions on the rise

While prosecutions by the Registrar of Companies are still relatively rare, we’ve seen increases over recent years. 

By way of example, in the year to April 2024, there were 2,400 prosecutions for failures to file annual company accounts. 

That figure compares to circa 1,400 in the year to April 2022 and circa 2,000 in the year to 2023.

New offence — failing to prevent fraud

Crucially, the introduction of the Economic Crime and Corporate Transparency Act 2023 brings with it a raft of new and additional offences — all of which will fall to the Registrar of Companies for enforcement.

That legislation aims to prevent the abuse of corporate structures and enhance the accountability of corporates and directors. It includes, for example, a new offence of “failing to prevent fraud”. Along with other new provisions, that offence will first come into effect from 1 September 2025.

It’ll be interesting to see how active the Registrar is in using these new powers and taking enforcement action in respect of the new offences.

Talk to us

Our shareholder rights specialists can outline your legal position as a shareholder in a private limited company and help you to navigate this complex area of law.

Talk to us by completing our contact form below.