Nowadays, the vast majority of companies have their own website. Someone wanting to find out about, or do business with a company is more likely to do an internet search than flick through the traditional business directories. So 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 its directors.
What are “online trading disclosures”?
These are the legal requirements for UK companies to disclose their full registered name and certain other corporate details on their website.
These requirements have been kicking around for over 10 years. The current rules are contained in the snappily entitled Company, Limited Liability Partnership and Business (Names and Trading Disclosures) Regulations 2015.
Why do we have them?
Their purpose is to ensure that anyone who has dealings with a company knows:
- its legal identity – so, if they needed to take action against it, they would know the correct legal entity to sue;
- its limited liability status – in other words, if something goes wrong, there is going to be no recourse against shareholders or directors personally if the company doesn’t have funds to meet the claim; and
- where they can inspect company records (such as the register of members).
What must be disclosed?
The following details must appear on the company’s website:
- the company’s full registered name (which might be different from the company’s brand or usual trading name);
- the part of the UK in which the company is registered (e.g. Scotland or England & Wales);
- the company’s registered number; and
- 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.
Where on the website does this information have to go?
It’s not necessary to put the registered name on every page of the website. But it should be placed where it can be easily read like the home page or any contact page.
What are the consequences of failure to comply?
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.
In addition, there is a risk that the company might not be able to enforce a contract against someone who (broadly speaking) has suffered prejudice caused by the breach.
What should companies do?
Check your website to ensure it complies with the above requirements. It should be fairly simple to add the required information if it’s missing.
Is that it?
Companies should note that there are also trading disclosure obligations covering business premises, orders, invoices, business letters, emails and other business correspondence and documentation.