How do you investigate corporate abuse?
Note – the following information relates to the investigation of companies that are actively trading, or which have ceased trading without entering into insolvency proceedings, using powers of investigation under the Companies Acts. For information on investigations into companies which have entered into formal insolvency proceedings see our pages on Insolvent Companies.
How do you investigate corporate abuse?
Complaints may be made against a limited company where there are concerns about serious misconduct or malpractice. Company Investigation officials have the power to investigate companies which are still active, and to apply to the court for a company to be wound up where there is sufficient evidence that it is in the public interest to do so. Officials carry out investigations prompted by the receipt of complaints.
In order to carry out this function effectively, Company Investigations exercise the Secretary of State’s powers of investigation under the Companies Acts.
These acts grant the power to undertake focussed, fact finding investigations into a company. These are not criminal investigations. Investigators take an appropriate and realistic view of issues brought to their attention and seek to investigate aspects of corporate behaviour which might cause harm to the business community and/or the wider public. They do not carry out exhaustive enquiries into all aspects of a company’s activities.
When an investigation takes place, Company Investigations officials will:
- Visit the company without warning.
- Speak to the company’s officers and ask questions.
- Examine relevant paper and electronic documents and take copies.
They can also, by law, ask wide ranging questions and demand detailed information from:
- Company directors
- Company employees
- Third parties in possession of relevant documents and information.
They also have the power to enter and remain on premises considered to be used in a company’s business.
Investigators can apply to the Magistrates Court for a search warrant if the company under investigation fails to co-operate, or there is a real possibility of documents being destroyed.
A lack of co-operation by an individual can be reported to the court which may hold that person in contempt of court, which may be punishable by a fine or imprisonment.
If it is in the public interest the information may be used for civil proceedings brought by the Secretary of State or in regulatory or disciplinary proceedings. This may include applying to the court for the company involved to be wound up, or to seek disqualification orders against its directors.
The information obtained from an investigation can however, be used to launch a criminal investigation. Such an investigation may be conducted for example by the Department for Business Innovation and Skills or the Police.
The results of an investigation can only be disclosed to specified people or organisations, and for specific purposes. As a result the information obtained cannot be disclosed to individuals who are seeking to recover money or other items from a company.
The length of any investigation depends on various factors such as complexity and the amount of co-operation received.
Company Investigators aim to complete 90% of investigations within six months.
For further details of the legal basis on which our investigations are carried out, please refer to the section on "The Law".
