The Economic Crime and Corporate Transparency Act 2023 (the “Act”) received Royal Assent on 26 October. It is likely to have a significant practical impact on companies.
The aim of the Act is to tackle economic crime and improve corporate transparency. It encompasses a wide range of topics including enforcement over crypto-assets and money laundering, but one of the key areas covered, which we will be focusing on in this article, relates to Companies House reform.
Companies House reform
Part 1 of the Act introduces certain amendments to the Companies Act 2006 and aims to achieve a number of goals relating to the way Companies House operates, including greater “gatekeeping” powers for Companies House, allowing it to be more than simply a record holder. The new measures have been described by Companies House as “…one of the most significant moments for Companies House in our long history” allowing them to play a role in “…disrupting economic crime and preventing abuse of the register, while supporting economic growth and ease of doing business in the UK.”
The Act introduces four new objectives for the Registrar of Companies:
- ensure that any person who is required to deliver a document to the Registrar does so (and that the requirements for proper delivery are complied with);
- ensure that information contained on the Register is accurate and that the Register contains everything it ought to contain;
- ensure that records kept by the Registrar do not create a false or misleading impression to members of the public;
- prevent companies and others from: carrying out unlawful activities, or; facilitating the carrying out by others of unlawful activities.
Furthermore, the Act ushers in a number of new measures, including:
- identity verification for all new and existing directors, People with Significant Control (“PSCs”) and those who file on behalf of companies – Companies already on the register will have a transition period in which to verify these identities. Identity verification requirements will also apply to all new registered company directors and PSCs;
- clarification around accounts filing requirements for small companies and micro entities, including in particular: (a)requiring small companies to file a profit and loss account and a directors’ report; and (b)requiring micro-entities to file a profit and loss account;
- stronger requirements for “appropriate” registered office addresses – in order for a registered office address to be considered “appropriate” it must be one where documents would be expected to come into the hands of someone acting for the company and where delivery can be recorded by an acknowledgment of delivery – PO Box addresses will not be permitted;
- a requirement for an “appropriate” registered email address to be provided to the Registrar;
- additional powers for the Registrar relating to the rejection of inaccurate information, querying discrepancies and correcting information on the Register – including the ability to raise queries with companies and to annotate the Register where potential issues have been flagged;
- greater checks on permitted company names; and
- a requirement for all companies to confirm they are incorporating for a “lawful purpose” and to reconfirm that its future activities will be lawful upon filing each confirmation statement.
Not all measures will come into force immediately, as some (including in particular the identity verification system) will require the relevant systems to be put in place and further clarity to be provided. Others, such as the additional powers for the inspection of information provided to the Registrar are expected to start coming into force in early 2024.
What you need to do
The practical impact of these provisions will become clearer as further guidance is issued by Companies House and secondary legislation brings certain measures into force. For now, directors and company secretaries should be aware of the proposals and start to review their current practices for Companies House filings, consider who within their company structure may be subject to the new verification requirements and ensure that all company records are complete and up to date.
More information
You can find more information about the Economic Crime and Corporate Transparency Bill on the government’s site. If you would like more focused advice on what it could mean for your company, please get in touch.
Important Note
The information contained within this document is subject to the UK regulatory regime and is therefore primarily targeted at consumers based in the UK.
This article is distributed for educational purposes only and should not be considered financial advice.
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The opinions stated in this document are those of the author and do not necessarily represent the view of Progeny and should not be relied upon to make a financial decision.
Information contained herein has been obtained from sources believed to be reliable but is not guaranteed.
If you are unsure about the suitability or otherwise of any product or service, we recommend that you seek professional advice.
