UK Companies House issued an update on 17 October for the planned implementation of new measures contained in the Economic Crime and Corporate Transparency Act 2023 (ECCTA), which is intended to improve transparency over UK companies and other legal entities to strengthen the business environment, support national security and disrupt economic crime.
Given the scope and complexity of these changes, Companies House (CH) said it was not currently possible to set a firm timetable for implementation of all measures because some required secondary legislation. However, around 50 statutory instruments will be commenced over 18 months with implementation activity and transitional periods continuing until completion in 2027.
Since March this year, CH has been empowered to improve the quality of information on the register by:
- Querying and rejecting new information received in customer filings that it suspects to be wrong or fraudulent.
- Removing more inaccurate information from the register, including the names and addresses of citizens that have been used without consent.
- Querying and rejecting company names that have been chosen to mislead customers, facilitate fraud or give the false impression that the company is connected to a foreign government.
- Improving the accuracy and reliability of registered office addresses by introducing a new definition for an appropriate address that excludes PO Boxes and allowing strike off measures to be commenced against companies that do not provide an appropriate address within a specified period.
It has also been able to improve investigation, enforcement and data sharing by sharing more information with law enforcement agencies and regulatory bodies, and undertaking greater analysis of information held, including comparison against external data sets. It can reject documents notifying appointment of a new director to an existing company where that individual is disqualified.
CH has further been able to require companies to provide a registered email address to allow it to quickly contact companies about filing, to confirm that the future activities of the company are lawful at the point of incorporation, and to confirm this every year on the confirmation statement.
CH has, since May, been able to charge higher incorporation and annual fees to fund investigation and enforcement activities against those misusing the register, and from this autumn is empowered to issue financial penalties for any relevant offences under the ECCTA and the Companies Act.
Moving forward, timelines are dependent on suitable Parliamentary time and will be kept under review, but current planning reflects the following assumptions:
- Winter 2024, CH expects to be empowered to expedite the striking off of companies where the registrar has concluded the company has been formed for a false basis.
- Spring 2025, CH expects to be able to –Carry out checks on Authorised Corporate Service Providers (ACSPs) to authorise them to carry out verification services – ACSPs will be required to be registered in the UK and be subject to the UK’s anti-money laundering regime.Allow individuals to voluntarily verify their identity.Receive and assess applications from individuals seeking to have residential addresses suppressed from public disclosure in certain circumstances.
- Summer 2025, CH expects to allow access on request to certain trust information on the Register of Overseas Entities.
- Autumn 2025, CH expects to be able to –Make identity verification a compulsory part of incorporation and new appointments for new directors and people with significant control of a company (PSCs).Begin the 12-month transition phase to require more than seven million existing directors and PSCs to verify their identity as part of the annual confirmation statement filing.
- Spring 2026, CH expects to be able to –Make identity verification of the presenters a compulsory part of filing any document.require third party agents filing on behalf of companies to be registered as an ACSP.Reject documents delivered by disqualified directors as they will be prohibited from doing so, unless they are delivered by an ACSP for specified filings permitted by law.
- Year-end 2026, CH expects to be able to –Require all Limited Partnerships to submit more information, providing greater transparency for users of the register.Complete the transition period for all individuals on the register requiring identity verification and start compliance activity against those who have failed to verify their identity.Facilitate greater cross-checking of information and data between itself and other public and private sector bodies.
Following accounts’ reform, and after an extensive formal notice period, CH will further:
- Mandate software-only filing for all accounts.
- Remove the option for small companies and micro-businesses to file abridged accounts.
- Require all companies to file profit and loss accounts and require small companies to also file their directors’ report.
- Require a company claiming an audit exemption to provide an enhanced statement from its directors on the balance sheet, specifying the exemption being claimed and confirming the company is eligible for it.
- Limit the number of times that a company can shorten its accounting reference period.
Following the implementation of restrictions on corporate directors, any corporate directors of companies will be restricted so that any corporate director of a company must have an all-natural person board.
All the directors of the corporate director will be required to verify their identity for the corporate director to be registered, and only UK corporate entities with legal personality will be capable of acting as a corporate director. CH will prohibit the use of overseas companies from acting as corporate directors in the UK.
Contact Sovereign Corporate & Trustee Services: ukcorporate@sovereigngroup.com.
