Law

Ensure your company details at the ASIC are accurate – the £8.8 million typo

By 23 February, 2015 January 21st, 2019 No Comments

A recent UK High Court decision has highlighted the problems that can arise when incorrect information is recorded on a regulator’s company register.

The Facts

The UK Companies House (the UK equivalent of the Australian Securities and Investments Commission (ASIC)) had intended to give notice that “Taylor & Son Ltd” had been placed into liquidation, but an additional “s” was typed in the records so “Taylor & Sons Ltd” was registered as being placed into liquidation instead.

A lawyer acting for Taylor & Sons Ltd promptly informed the UK Companies House of the error, but it took three weeks for the error to be corrected.

During that time, some suppliers were informed that Taylor & Sons Ltd was in liquidation via credit agencies and others heard of rumours that the company was experiencing financial difficulty. Around 3,000 suppliers thereby terminated their agreements with Taylor & Sons Ltd. Other suppliers altered their rules to require payments for supplies to be paid much sooner than usual, which lead to serious cash-flow problems. Given the loss of these contracts and new restrictive contractual terms, Taylor & Sons Ltd were subsequently unable to secure additional funds through bank loans.

Given those various financial difficulties, Taylor & Sons Ltd was forced to enter into administration, despite many successful years in the steel fabrication industry, including the two World Wars.

Taylor & Sons was a well-respected and substantial business which had retained a connection to the original Taylor family. The demise of the company was big news in the engineering and steel making community in South Wales.

The Decision

In a widely publicised decision by the UK High Court, Sebry v Companies House and another [2015] EWHC 115 (QB), former Managing Director of Taylor & Sons Ltd, Philip Sebry brought a claim for breach of statutory duty and negligence against the UK Companies House and the Registrar of Companies.

His negligence claim was successful.  The Court did not assess damages but the losses have been valued at £8.8 million pounds.

You can read the full UK High Court decision here.

Comment

The facts of the Decision are quite extraordinary: a one letter typo seemingly causing the downfall of a successful business.

On a more practical level, it is a reminder to ensure that the details of your company and your clients’ companies are recorded accurately on the ASIC corporate register.  To assist:

(a) You can check a current company’s details for $9 by clicking here;

(b) You can download the form to update your company’s details by clicking here (generally changes need to be notified within 28 days to avoid paying late fees to the ASIC);

(c) You can contact us here; and

(d) You can also watch the ASIC’s self-explanatory video here:

Sources

Stephens, E., Beware, a typo might cost you millions! (29 January 2015) LexisNexis <http://blogs.lexisnexis.co.uk/randi/beware-a-typo-might-cost-you-millions>; ASIC, Changes to your company(20 October 2014) ASIC <http://asic.gov.au/for-business/changes-to-your-company/>; and Sebry v Companies House and another [2015] EWHC 115 (QB).

Liability limited by a scheme approved under Professional Standards Legislation. The information contained in this article is general in nature and is intended to be introductory only – you should not rely on it in place of legal advice. If you require advice please contact us.