Companies House: Greater Expectations Of Companies
Now that the Economic Crime and Corporate Transparency Act 2023 (ECCTA) has been passed, directors are reminded of the upcoming increase in Companies House (CH) powers and expectations of UK companies. They should also be prepared for the inevitable higher CH fees.
The ECCTA implements three key government objectives. Unsurprisingly, these include preventing organised criminals from abusing corporate structures, and strengthening the UK’s response to economic crime.
The third objective is ‘improving the services delivered by Companies House”, which in practice means that it has been handed significantly greater powers. In fact, the Registrar of Companies recently said: “This is one of the most significant moments for Companies House in our long history.”
What does this mean for directors?
Companies and directors need to ensure they are aware that some measures, including the below, are expected to come in force from early next year – and to be prepared. It is unwise to be caught off guard as new provisions are rolled out.
Verifying identity – Identity verification for all new and existing registered company directors will be introduced, after the required system development and secondary legislation. In addition, people with significant control, and those filing on behalf of companies will also be subject to identity verification before they can be registered on the CH register.
CH will also have enhanced power to check company names; and to query information and reject information that appears incorrect or inconsistent with information already on the register.
Filing requirements - Software-only filing of annual accounts is to become a legal requirement and all other filing routes will be removed.
Enforcement powers – CH will have greater and more effective investigation and enforcement powers. Note that there will be a new corporate offence of failing to prevent fraud (expected to come into effect during 2025). An organisation will be liable where a specific fraud offence is committed by an employee or agent, for the organisation’s benefit, and where the organisation lacked reasonable fraud prevention procedures.
Information sharing - CH will have greater ability to share relevant information with other organisations and regulatory bodies.
Confirmation of lawful activities - Companies will be required to confirm they are forming the company for a lawful purpose when they incorporate. They will also need to confirm (on their annual confirmation statement) that its future activities will be lawful.
Public ‘annotations’ – CH will be able to annotate the register so that any potential issues with information supplied to CH will be publicly visible.
Changes to addresses, and removal from register – It will also be able to change a company’s registered address if the Registrar is satisfied the company is not authorised to use it. CH will also have power to remove fraudulent companies from the Companies Register
Companies House has assured directors that they don’t need to do anything differently for now (some of the measures are not implemented just yet).
But making sure you’re aware of what is imminent and how you will be impacted once the provisions are rolled out it is a prudent first step. Take expert advice if you are unsure of the potential implications for you and your company.
If you would like us to cover an issue in the next NGM Tax Law Newsletter, we would be pleased to hear from you