The Economic Crime and Corporate Transparency Bill (‘the Bill’) was introduced to Parliament in September 2022. Through the Bill, the government is reforming the role and powers of Companies House and better equipping Companies House to tackle money laundering and other economic crime, improving transparency over UK companies and other legal entities.
What changes are being proposed?
The reforms being proposed for Companies House include:
- Introducing mandatory identity verification.
This will apply for all new and existing registered company directors, People with Significant Control, members of LLPs, and those delivering documents to Companies House. The verification will require a photograph which will need to match an identifying document. Once verified, users will have one account that will be able to access all Companies House services. There will be a grace period for existing company directors to verify their identity but if they don’t do it within that timeframe, they will be committing an offence and may face a civil penalty. A company that is directed by an unverified director will also be committing an offence.
- Broadening the Registrar of Companies House’s powers
The new power will include the ability to check, remove or decline information submitted to, or already on, the companies register. Companies House will also be able to reject documents where there is a reason to query the information provided, giving the applicant an opportunity to re-file once the query has been addressed. If the query is not appropriately addressed the filing will continue to be rejected.
- Improving the financial information at Companies House
This is to ensure that the financial information provided is more reliable, complete and accurate. As a result of this change, small companies will no longer have the option to prepare and file abridged accounts and will be required to file both their profit and loss account and directors’ report. Micro-entities will also be required to file their profit and loss account but will continue to have the option to not prepare or file a directors’ report. Dormant companies will be required to file an eligibility statement.
- Enhancing the protection of personal information provided to Companies House.
Individuals will be able to suppress information such as home address, signatures, occupation, date of birth (for documents filed before 10 October 2015) and any other sensitive information to protect themselves from fraud and other harms.
- Changes to statutory/company registers
A company’s register of members will no longer be able to be kept on the central register at Companies House. It must be maintained internally on an local register by the company. Additionally, the full names and addresses of all members will need to be included on all Confirmation Statements going forward, once the Bill is passed as law. For public companies this will only apply to members with 5% or more of the shares. All other registers, such as registers of directors and register of charges, must be kept on Companies House and Companies will no longer be required to maintain them on an internal register once the Bill receives the Royal Assent.
Has it come in to force yet?
The Bill is currently going through Parliament and is expected to receive the royal assent at some point in 2023. The changes will then be implemented over the next few years with some becoming effective immediately and some of these changes requiring additional secondary legislation and guidance.
While these are positive steps to assist the UK with tackling money laundering other economic crime problems and simplifies part of the statutory registers requirements for companies, there will be additional administrative steps that companies will have to adopt with regards to its register of members and ID verification of its directors, and PSCs, as well as be more transparent with its financial reporting to Companies House.
If you would like to know any more about the pending changes and what it will mean for you, or any other matter relating to the running and set up of your company, please get in touch with our corporate team: firstname.lastname@example.org