The Economic Crime and Corporate Transparency Act (the Act) became law in October 2023; since then, Companies House has been preparing to implement those changes contained in the Act intended to tackle economic crime in the UK, improve the transparency of corporate information and reform its role as the UK companies registry. These changes will have a knock-on effect for registered companies, limited liability partnerships (LLPs) and limited partnerships (LPs) in the UK.
Over recent years criticism has been levelled at the quality of the data and accuracy of the information filed at Companies House. Historically, Companies House has operated as a passive recipient of information filed there; the new reforms are intended to transform its role into that of an active regulator with a new objective to promote and maintain the integrity of the register.
In a New Year blog, Companies House referred to this “landmark legislation” resulting in “real improvements for the UK economy, for businesses, and for individuals”.
What does this mean for business owners?
Companies House will have additional powers to support its new, more pro-active role. All corporate entities currently required to file information at Companies House (including private limited companies, public limited companies, LLPs and LPs) will be affected.
What changes can you expect to see from Companies House?
- Greater powers to query and reject information and to ask for supporting evidence from individuals filing such information.
- Stronger checks on company names. The Act gives Companies House additional powers to reject an application for an incorporation or change of name where that name could be used to facilitate certain crimes, or if such name consists of or includes computer code, or that name suggests a misleading connection with a foreign government or authority. Companies House can also require an existing company to change its name if the name is not permitted under the new regime. Should it fail to comply, Companies House itself may change that company’s name.
- The ability to annotate the register when information appears confusing or misleading.
- Actions to clean up the register, using data matching to identify and remove inaccurate information.
- Sharing data with other government departments and law enforcement agencies.
To support this, in addition to its existing powers to prosecute criminal offences under the Companies Act 2006 (CA 2006), the Registrar can now impose financial penalties of up to £10,000 for breaches of the CA 2006 without the need to first go to court. As a result, you should check that the information filed at Companies House in connection with your company is complete, correct and up to date.
Practical considerations
If your business is a registered company, LLP or LP there are certain things you need to know because from 4 March 2024 your dealings with Companies House will change in the following ways.
- Appropriate address requirement – Your registered office address must be an “appropriate address.” This means an address where any documents sent to the registered office should be expected to come to the attention of a person acting on behalf of the company and any documents sent to that address can be recorded by an acknowledgement of delivery. If your business currently uses a PO Box address as the registered office, this will no longer be permitted.
- Email address requirement – You must supply an email address to Companies House. From 4 March 2024, existing companies will need to include a registered email address when they file their next confirmation statement. New companies must provide a registered email address on incorporation. This email address will not be published publicly on the register. Failure to maintain an appropriate registered office address or to provide an email address will result in the company and its directors being guilty of an offence punishable by a fine.
- Lawful purpose requirement – On the annual confirmation statement, you will need to make a statement that the company’s intended future activities are lawful. New companies will be required to confirm they are forming the company for a lawful purpose on incorporation. The intention of these “lawful purpose” statements is to make it clear that all companies on the register have a duty to operate in a lawful way. Companies House may take action against your company if it receives information that confirms you are not operating lawfully.
Further changes in the pipeline
The changes set to be implemented in March are only the first tranche in a series of reforms contained in the Act. Further measures expected later this year include:
- a new system of identity verification for directors, members of LLPs and persons with significant control;
- a new regime of centralised registers under which companies will no longer be required to maintain a register of directors, a register of directors’ residential addresses, a register of secretaries, and a register of PSCs. The relevant information will instead be kept at Companies House; and
- increased filing fees at Companies House.
Further information can be found at Gov.UK. If you have any questions about the Act and how the developments at Companies House will impact your company, contact Aidan Clucas, Associate in the Clarke Willmott corporate team.
Clarke Willmott is a national law firm with offices in Birmingham, Bristol, Cardiff, London, Manchester, Southampton and Taunton and is this year celebrating its 135th anniversary.
