Companies House prosecutes Company Directors under the Companies Act 2006 (s.451) for late filing of Company annual financial statements, which are all dealt with in a Magistrates’ Court in the centre of Cardiff, not far from Companies House’s main offices.
Besides unlimited fines, prosecution costs, and victim surcharge, being imposed on Company Directors on conviction, there are other serious consequences of being convicted.
Three such convictions can in some cases lead to a Director being disqualified as a UK Company director for a number of years.
A conviction can also complicate travel and employment prospects in other countries, such as the USA.
Under US Immigration law entry to the USA can and usually will be refused if the individual has been convicted of an offence considered grave or serious under US law.
If a conviction, which ought to have been declared when a visa was applied for, is not mentioned but is then declared under questioning at the place of entry to the USA, it can result in entry being refused.
It can also result in a permanent ban on any future application to enter the USA because of the failure to make an appropriate declaration. “Concealing” the conviction is seen as an act of “material misrepresentation”, triggering a permanent ban for the individual trying to enter the USA.
This can happen unintentionally because the wording of the relevant question, and so the declaration to be made, for example, when seeking an ESTA visa waiver, differs from the wording of the declaration required by an Immigration official at the point of entry.
The ESTA declaration, in the context of a conviction for late filing of accounts can quite properly be answered in the negative, but the differently worded, and much broader question posed at the point of entry, requires admission of the offence. This can create a “trap” for which Directors may not be prepared.
An offence once declared triggers an assessment of an individual’s “ineligibility” for entry to the USA (under Section 212(a)(2)(A)(i)(II) of the US Immigration and Nationality Act).
Serious offences, involving dishonest intent, fraud, malice, corruption, or violation of a controlled substance law, are likely to result in permanent inadmissibility to the United States.
The U.S. does not recognize the UK’s Rehabilitation of Offenders Act, so that “spent” convictions potentially must still be disclosed. This applies regardless of what in the UK may be considered the minor nature of an offence, or the passage of time since the offence was committed.
While a conviction under s.451 may be considered as a fixed penalty for an administrative oversight, it should not be assumed that either the US Embassy, or an Immigration official, will simply accept a Director’s statement, without appropriate evidence, that it should not bar the individual from entry to the USA.
Besides the potential for a conviction to result in a Director being refused entry to the USA, or having to reconsider which type of visa application to make, and the implications for timing of travel arrangements, a conviction may also affect a US employer’s consideration of an offer of employment.
This may be because the employer, or its’ US Counsel, may not fully understand the legal nature of the conviction as it relates to US law, but also because of concerns about the effect on the individual’s travel arrangements every time they seek to enter the USA to attend meetings and give presentations.
It is essential therefore to take advice on how best to deal with a prosecution, to try to avoid a conviction, and, if there is a conviction, how to prepare to deal with these US disclosure requirements, and if necessary with prospective US employers.
Although these notes refer to the USA, there are similar considerations in relation to other countries.
In many cases we have successfully engaged with the Prosecution on behalf of Directors, and persuaded the Prosecution to withdraw charges, which we were able to show were not in the public interest.
We specialise in dealing with Companies House prosecutions, and we can offer practical advice, and strategic direction, as well as representation.
We are often instructed by individual Directors, and in respect of their clients, by other law firms and by firms of Accountants.