Online trading disclosures are not an optional extra
Nowadays, the vast majority of companies have their own website. Anyone who wants to find out about, or do business with, a company is more likely to do an internet search than flick through traditional business directories. Therefore, it’s important that companies position themselves online with a professional looking and user-friendly website.
The aesthetics and practicality of a website are, understandably, important considerations. However, a crucial factor that is often overlooked by companies is their legal obligation to make certain trading disclosures on their website.
The consequences of a failure to comply with these obligations can be serious for both the company and even its directors. So what are online trading disclosures? These are the legal requirements foruk companies to disclose their full registered name and certain other corporate details on their website.
These requirements have been in place for over ten years, with the current rules contained in the Company, Limited Liability Partnership and Business (Names and Trading Disclosures) Regulations 2015.
The purpose of online trading disclosures is to ensure that anyone dealing with a company knows a number of details.
Firstly, its legal identity – so if someone needed to take action against the company, they would know the correct legal entity to sue.
Secondly, its limited liability status
Failure to comply with legal obligtaions can be serious,
says Eric Galbraith
– in other words, if something goes wrong, there won’t be any recourse against shareholders or directors personally if the company doesn’t have funds to meet the claim. Finally, it’s where they can inspect company records, such as the register of members.
The details that must appear on the company’s website are: l the company’s full registered name (which may differ from the company’s brand or usual trading name); l the part of the UK in which the company is registered (e.g. Scotland or England & Wales); l the company’s registered number; and l the company’s full registered office address.
If the company is limited by guarantee, and is exempt from the obligation to use the word “Limited” as part of its registered name, the website must display a statement that the company is a limited company.
It’s not necessary to put the registered name on every page of the website. However it should be placed somewhere it can be easily read, such as the home page or contact page.
Failure to comply without reasonable excuse is an offence committed by the company and any director who has permitted, or failed to take all reasonable steps to prevent, the failure. A company or individual guilty of an offence is liable to a fine, and for continued contravention, a daily default fine.
It is worth checking your website to ensure it complies with these requirements. It should be fairly simple to add any missing information.
Companies should note that there are also trading disclosure obligations covering business premises, orders, invoices, business letters, emails and other business correspondence and documentation. Eric Galbraith is a Partner at Brodies LLP.