This post is an updated extract from our Investigating Companies: A Do-It-Yourself Handbook. Read, download or purchase the whole book here.
As well as speaking to the company and its workers directly, you can find a lot of useful information in the company’s publications.
In general, the information that companies publish about themselves will be most useful for finding out details of their finances, staff and shareholders. Their reports and updates on their operations are unlikely to portray the company as anything other than squeaky clean.
Many companies – and pretty much all big companies – produce an annual report together with their accounts, describing their activities over the previous year, including details of their operations and headline financial results. You can usually download the annual report for free from the company’s website. The reports of the bigger multinationals describe their operations in different countries and a breakdown of their various operations, worksites, staff numbers and pay, and, usually, directors’ pay. Some companies will also include a corporate social responsibility (CSR) report in their annual report, while some will release this separately (see Corporate Watch’s What’s Wrong with CSR report for a critical view).
Remember that these reports are intended to present the company in the best possible light in order to maintain investor and shareholder confidence. They are usually big, glossy publications, full of pictures of smiling people talking about how great the company is. Unlike the accounts, they are not audited.
Companies’ websites are becoming increasingly informative, and include most of the information in the annual report, plus news, history and press releases, as well as updated sections on senior staff and their operations. Most are expanding their social media profiles, so following their Twitter, Facebook, Youtube and other accounts can be a good way of keeping up to date with their announcements.
Reading a company’s annual accounts is the best way to find out how much money it has. They won’t give you all the information you want but they’re the best source available, short of speaking to the company’s accountants. Among many valuable nuggets of information, the two main things the accounts give you are:
o a snapshot of what the company owns and what it owes;
o details of its financial transactions over the last year, including how much profit it made, how much tax it paid, how much cash it has and how much it paid to its shareholders.
See section 2.6 for an introduction to reading and understanding company accounts. You’ll usually be able to download the accounts of bigger companies from their website. If not, you can get them from Companies House (see below).
The amount of information a company publishes in its accounts will depend on how big it is. Smaller companies are allowed to disclose much less information – often just a balance sheet, a basic income statement and a few notes. Disclosure requirements also differ according to the country the company is registered in. Some tax havens don’t require companies to publish accounts.
For obvious reasons, documents not intended for public viewing – for example memos, emails, presentations, strategy documents or evaluations – tend to be far more candid about the company and its operations.
Your best bet for getting these is from a member of staff who’s annoyed at the company and sympathetic to what you’re doing. If you’ve got the time and inclination, you could even try to get a job with the company, though you’d have to be in it for the long haul to get access to really sensitive material (see section 1.4).
Update emails or newsletters that many companies send to their employees often include new details of recently awarded or completed contracts, site changes or new offices, staff and director changes and management/training/computer systems in the group (though you’ve often got to wade through a sewer of corporate speak to get to the good stuff).
Management accounts are produced for internal use, often a few times a year (as opposed to the publicly available statutory accounts that are produced annually). They are intended to inform decisions regarding the management of the company and will usually go into a lot more detail than statutory accounts, breaking revenue down by individual product line, or showing the cost and profits of individual sites, for example.
Publicly-listed companies and some private companies also produce investor presentations and updates for their shareholders and potential investors, which contain financial news and analysis. The information provided for shareholders may be more enlightening than that shared with the public so can be useful to have a look at.
You can usually find them in the Investor Relations section of a company’s website, although they are often password-protected from the general public.
Buying a share should allow you to access this. It’ll set you back a few quid but it may be worth it for the access it gives you. You’ll have to do this through a stockbroker – either online or by phoning them up and screaming “BUY!” in your best banker voice.
ANNUAL GENERAL MEETING (AGM)
Buying a share also gets you an invitation to the company’s AGM, where directors present updates on the previous year’s activities and future plans. Votes are held to approve dividends, elect the board of directors and to approve their remuneration, as well as on certain other issues arising and resolutions. Emergency general meetings (EGMs) are held when a matter arises that cannot wait till the AGM. If you don’t have a share but know someone who does, you can go as their ‘proxy’. Otherwise, AGMs of larger companies are often covered by the mainstream media and the business media, so you can at least track any significant decisions or developments through them. You can also go along to identify the shareholders that are attending and try to talk to them.
Publicly listed companies are also required to submit a variety of regulatory notifications depending on the stock exchange their shares are listed on. For the London Stock Exchange (LSE) this includes half-yearly reports in addition to the annual accounts, profit expectations, significant changes to their financial structure, transactions with directors, and any proposals for mergers or acquisitions. You can normally download these from the LSE website, where you can also find the company’s current, and historical, share price.
A bond prospectus produced by a company when issuing new debt to the market will likely be a big, dense document but it may contain information about a company’s finances that you won’t find in the accounts, as well as details of the terms of the bond (how much interest it will pay, what it is secured against and so on).
Many are publicly available and can be found through a web search using the exact name of the bond, as stated in the accounts (see section 2.5). Otherwise you’ll have to ask the company for a copy or access the investor relations part of their website.
The business media and other business information sources provide lots of useful analysis of a company’s finances. See section 3.5 for details.
The owners of a company are the shareholders.
If you want to find the shareholders of a private limited company (one with Ltd after its name – see section 2.2), first check the back of the accounts. One of the final notes to the accounts may give you details of the company’s owners (see section 2.6).
If it is a subsidiary of a larger group of companies, the accounts will often tell you both the immediate owner of the company and the ‘ultimate’ owner of the group.
PERSONS OF SIGNIFICANT CONTROL
Another way to find the identities of the people ultimately responsible for a company’s actions is to find out who it has registered as Persons of Significant Control (PSC). These are people who ultimately own more than 25% of the company’s shares or voting rights over those shares. Even if you own a company through a string of subsidiaries, you should still be declared a PSC, as ultimately you are responsible for its actions.
Since 2016 all companies have been required to declare their PSCs to Companies House annually. To find a PSC, go to the the ‘People’ tab on a company’s page, then click on ‘Persons with Significant Control’.
The stated aim of the PSC regulations was to combat money laundering and tax evasion by the use of shell companies. However there are various loopholes – the beneficiaries of trusts do not have to declare themselves, for example – and many companies do not appear to be disclosing their PSCs in the way that was expected.
CONFIRMATION STATEMENT AND ANNUAL RETURN
If you can’t find what you’re looking for in the accounts, try the company’s most recent Confirmation Statement, which all companies are required to submit to Companies House every year. This should contain details of the company’s PSCs (those who own over 25% of the company’s shares) and any changes of shareholding of any level since the last Confirmation Statement.
If there have been no changes of shareholdings recently and you want to see the full list of shareholders – including those who own 25% or less – you will need to find the last Annual Return the company submitted. These were replaced by Confirmation Statements in 2016. The Statement of Capital at the back of the annual return listed all the shareholders of a limited company and showed how many shares they each own.
If the company is part of a group the listed owner will be the immediate parent company within the group, rather than the ultimate parent company or shareholders. In this case, you’ll have to get the annual return of that company, then the one that owns it, and so on. See section 2.3 to understand company ownership.
The annual returns of publicly-listed companies (PLCs) do not contain shareholder details. You have to order a DVD-ROM for a list, which is updated every three years. However, since the requirements changed in 2009, PLCs have only had to disclose the details of shareholders who have more than five percent of the company’s shares. This has made it very hard to find out details of all the shareholders of publicly-listed companies. Try the annual report, which may list the top ten. If there’s nothing there try one of the online databases listed here (central public libraries and university accounts often have subscriptions to Orbis or Fame).
The document you really want is the company’s Share Register, which lists all the current shareholders. You can ask the company or its registrar (the company that administers the register) for a copy, but you have to have a ‘proper purpose’ for doing so and it’s a legal offence to lie when describing why you need it. If you pass the proper purpose test, you’ll have to pay to get a copy – more than £100 if it’s a big multinational – or you can go down to the registrar’s office to have a look at the register in person, although non-shareholders also have to pay for this. You can see it for free if you’re a shareholder (though you’ll still have to pay to get your own copy) but only if you do the proper purpose test.
For more information, see the briefing on this by the Institute of Chartered Secretaries & Administrators, available online. See section 3.5 for corporate databases that contain full lists of shareholders from publicly-quoted companies.
The UK government’s National Storage Mechanism (NSM) and the London Stock Exchange (LSE) require disclosure of any major purchases or sales of (UK) share holdings (usually three percent or more). You can piece together a broad picture of a publicly-listed company’s shareholders by trawling through the NSM and the market news section of the LSE website.
Given that so-called institutional investors – banks, insurance companies, pension and other investment firms that pool the money of thousands of different investors – now own a significant amount of UK company shares (see section 2.5), you could see if they have invested in the company you’re interested in. If you want to find out what a particular pension or investment fund owns, go to the website of the company or organisation that is managing the fund and look for the accounts or investment portfolios of the particular fund you are looking for. How many of their investments they disclose will depend on the fund. If you can’t find the details on their website, try a web search for the exact name of the fund in full, as sometimes business websites will give summaries of their investments. You could also try calling them up and asking if there is a list you could see. If you are looking at a fund for particular employees – for example a local government employees’ pension fund – you could ask the employees to ask for you, if you can get in touch with them. Contacting their union might be a good place to start.
FOLLOWING THE CHAIN …
As companies can themselves be owned by other companies, you may need to look through the ownership details of a chain of companies before you get to the ultimate owners of the company (see section 2.3). This information may be in the company’s accounts (see section 2.6) so check them first.
But things get difficult if people are investing through ‘shell’ companies to deliberately hide their identity. Companies or individuals can invest through another company they own, so that the name of the company shows up on the official documents instead of their names. The shell companies they are investing through often only exist ‘on paper’ and are mostly registered in countries or states with minimal disclosure requirements, meaning you can’t see their annual return or the documents you need to find out who owns them.
People can also use trusts to hide their identity (see section 2.2). For trusts, it may only be the name of the trustee – often a lawyer – that shows up in the trust’s names and details.
Nominee companies – mostly formed by a bank or another investment manager to hold and administer shares or other assets on behalf of the owner – can also play a similar role.
There is often no way round this. According to the Economist magazine: “the trail has gone cold in many a criminal probe because law enforcers were unable to pierce a shell’s corporate veil”. But try searching for the exact name of one of these companies on the web or in the business databases listed in section 3.5. It’s a long shot, but you could also ask the company they are investing in to see if they’ll tell you. Again, corporate databases can often help to find details of their ‘beneficial’ ownership (i.e. who is eventually receiving the money that is going through them). At the time of writing the government is considering forcing UK-registered companies to disclose their beneficial owners for public scrutiny, though time will tell how much more transparent things actually become.
RETURNS TO OWNERS
Find out how much the owners of a company are receiving in dividends from the accounts (see section 2.6). To find out how much they have received in total dividends, you’ll need to add up the figures from the accounts of each year they owned the company.
You can find how much owners of private limited companies bought and then sold a company for from the accounts from the relevant years, usually in the directors’ report at the front. It is more difficult for publicly-listed companies, but if you know when investors bought and sold shares, you can cross-reference this with the share prices on the relevant days from the London Stock Exchange’s website.
If you can’t find details of the directors on a company’s website or in its annual report, its annual return lists a company’s secretary and directors (see above for more on the annual return). Companies update details of changes of directors with Companies House as and when they occur. Since October 2009 directors have not been required to give their home address, and so most just give their company’s. However, if the director has been serving since before then, and hasn’t changed address, you can just go to a previous annual return to find their address.
You can also try searching the Electoral Register or a people-finder website like People Tracer. The latter two also have details of any county court cases they have been involved in. To find out if a director has any history of bankruptcy, contact the Insolvency Service, part of the Department for Business, Energy and Industrial Strategy, or use the free search function on their website. More and more company directors and senior staff are now on social media sites like Linkedin, which sometimes include contact details and a bit more background.
You can search Companies House for details of disqualified directors. You can also search by current and former directors, to see any other directorships they currently hold or have previously held – very useful for mapping corporate links. Some of the free online databases listed in section 3.5 allow you to search for directors, and much of the information contained in the annual report and other Companies House documents.
The annual accounts will usually contain some details of directors’ pay – at least how much the highest paid director is getting (see section 2.6). The ‘related party transactions’ note, towards the back of most accounts, will detail any other financial transactions between directors and the company (see here). The annual reports of bigger companies – and especially those that publicly list their shares – will often provide a more comprehensive breakdown of their directors’ ‘remuneration’, including salary, bonuses and pension contributions. They will often give details of their directors’ employment history, including political and civil service positions held.
Every UK company is required to file its accounts, annual return, and any change of name, director, address and other details, every year at Companies House, the state registry body. These documents are publicly available from the Companies House offices in Cardiff or London, or from the Companies House website. The website holds accounts since 1975 from all current and dissolved companies. For information prior to that, you’ll have to phone up and make a special request. Companies House will send you a copy of all the archived documents they have on DVD. This costs £20 per company and takes a few working days to turn around.
When you’re searching Companies House, make sure you’ve got the name of the company exactly right. If it’s part of a group, there may be other companies with very similar names. If in doubt, check the company number, which doesn’t change when a company changes its name. Remember that Companies House is only a registry body. It doesn’t check the documents filed to see if they have been completed correctly or if they are accurate. This can allow companies to get away with not publishing all the information they are supposed to and may mean you see some mistakes in the accounts. If you say “according to figures filed at Companies House” before quoting figures then it’s not your fault if they’re wrong (as long as you quote them accurately!).
Every country has it’s own equivalent of Companies House. A web search for something like ‘company register’ and the name of the country should bring up the one you’re looking for.
Several free online databases are springing up that present summaries of company accounts and annual returns (see section 3.5) but it’s worth getting the originals from Companies House to check the figures are correct.