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Companies (Audit, Investigations and Community Enterprise) Act 2004

Section 23 -  Power to enter and remain on premises

142.It is often very useful for inspectors or investigators to be able to gain access to company premises or to other premises where records of the company are held or its business is carried on.   The premises in question may be trading premises of the company, the address returned to the registrar of companies as the registered office of the company or the home address of one or more of the directors of the company.

143.To be able to gain access to, and spend time on, company premises during the course of an investigation carries great practical benefits.  In particular, it enables inspectors or investigators to exercise more effectively their powers to require the production of documents and information under sections 434 and 447 of the Companies Act 1985.  More generally, it also offers inspectors and investigators the opportunity to see the company’s operations in practice.  Inspectors have relied for this purpose on their power to require, and the directors’ duty to give, reasonable assistance in connection with an investigation, which are provided for by section 434.  But investigators authorised under section 447 had no similar power and could only enter and remain on premises (other than in a search warrant situation) by agreement with the company.   They might be asked to leave the premises at any time and would be trespassing if they did not do so.

144.Section 23 therefore inserts new sections 453A and 453B into the Companies Act 1985.  These new sections provide powers for inspectors and investigators to require access to and to remain on premises which they believe are used for the purposes of the business of the company they are investigating.

145.New section 453A(1)(a) provides that the new powers cannot be used in a particular investigation unless the Secretary of State specifically authorises their use.

146.New section 453A(1)(b) provides that the new powers are exercisable by an inspector or investigator if he or she thinks that it will materially assist his or her investigation of a company.  “Inspector” and “investigator” are defined in new section 453A(7) and (8).  The effect of the definitions is that the powers are available to inspectors appointed under Part 14 of the Act (except for inspectors appointed only under section 446) and to investigators authorised under section 447.

147.New section 453A(2) sets out the new powers.  An inspector or investigator can require entry to “relevant premises” and, having gained entry, can remain there for as long as he or she thinks necessary for the purpose of furthering his or her investigation.  “Relevant premises” are defined in new section 453A(3).  They are premises which the inspector or investigator believes are used for the purposes of the business of the company under investigation (including premises which are used for other purposes too).  If only a part of a building is used for the company’s business, the new powers will only be exercisable in relation to that part, since it will only be that part which constitutes the "relevant premises".  Entering that part of the building may involve passing through other parts which are not used for the company's business.  New section 453A will permit this.  “Relevant premises” also include any part of a private house which the inspector or investigator believes is used for the purposes of the company's business, even if that part is also used for other purposes.   The inspector or investigator will be able to move around “relevant premises” to which he or she has gained access and will not be confined only to a limited area (for example, one room).

148.The inspector or investigator can exercise his or her powers to enter and remain only at reasonable times.  A visit to business premises outside the company’s trading hours would not ordinarily be regarded as taking place at a reasonable time.  Other factors would also determine whether the powers are being exercised at a reasonable time. For example, it might be unreasonable to require access to premises when a major product launch is taking place on those premises attended by all staff and potential customers of the company.

149.New section 453A(4) enables the inspector or investigator to bring other people with him or her when entering premises.  For example, an inspector or investigator may need to be accompanied by one or more support staff to help with the copying of paper records, copying (with consent of the company) of computer records, taking notes of interviews or any other matters which may assist with the investigation.

150.When inspectors or investigators seek to enter relevant premises, they must produce evidence of their identity and their appointment or authorisation; and any person accompanying them must produce evidence of his or her identity (new section 453B(2) and (3)).

151.As soon as practicable after they enter premises, inspectors or investigators will be required to hand over to an “appropriate recipient” a written notice describing briefly their  powers and the rights and obligations of the company, occupier and any persons present on the premises.  “Appropriate recipient” is defined insubsections  (8) and (9).  Regulations will set out the contents of this notice (new section 453B(4)).  If there is nobody from the company present on the premises during the visit, the statement must be sent to the company as soon as reasonably practicable afterwards together with notification of the fact and time of the visit (new section 453B(5)).

152.Intentional obstruction of an inspector or investigator will be an offence (new section 453A(5)).  The penalty for committing the offence is provided for by a new entry in Schedule 24 to the Companies Act 1985 added by Schedule 2, Part 3, paragraph 26(4). On conviction on indictment, the penalty is a fine with no maximum limit. On summary conviction, the penalty is a fine not exceeding the statutory maximum of £5,000.  This new offence relates only to intentional obstruction.  The main sanction for failing to admit an inspector or investigator to premises when required is provided for by new section 453C added by section 24.

153.New section 453B(6) and (7) provide that as soon as reasonably practicable after a visit to premises by inspectors or investigators exercising their new powers, a written record of the visit containing information prescribed in regulations must be prepared.  A copy of this record must be given to the company and (if different) an occupier of the premises on request.

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