In October 2023, the Economic Crime and Corporate Transparency Act (the Act) received Royal Assent, being the second part of the legislative package aimed at preventing the abuse of UK corporate structures and tackling economic crime.
The Act brings various changes to the Companies Act 2006, whilst providing several significant reforms to Companies House's powers which apply across the United Kingdom, and which represent some of the most significant changes for Companies House in its long history.
On 29 February 2024, the Economic Crime and Corporate Transparency Act 2023 (Commencement No. 2 and Transitional Provision) Regulations 2024 brought into force the first set of substantive changes taking effect from 4 March 2024. The key changes are outlined in the table below.
Rationale
The primary aim of the Act is to improve the accuracy and quality of the information held on the company register whilst discouraging economic crime and enhancing the reputation of the UK economy.
The Act introduced four new statutory objectives for the Registrars of Companies for England and Wales, Scotland, and Northern Ireland (the Registrars) and placed a new duty upon the Registrars to seek to promote these new objectives when performing their functions which include:-
1. to ensure that anyone who is required to deliver a document to the Registrar does so (and that the requirements for proper delivery are complied with);
2. to ensure the information contained in the register is accurate and that the register contains everything it ought to contain;
3. to ensure that records kept by the Registrar do not create a false or misleading impression to members of the public; and
4. to prevent companies and others from carrying out unlawful activities or facilitating the carrying out by others of unlawful activities.
Companies House - Key changes
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1. Company names |
The Secretary of State will have the power to change a company name that was chosen with the intent of facilitating criminal conduct in mind, contains computer code or its name suggests a connection with a foreign government. In addition, a person will be able to challenge the name of a company registered in the UK if its use anywhere in the world would likely mislead members of the public anywhere in the world. This expands upon the current position that a person can challenge the name of UK registered company if its use in the UK would likely mislead members of the public in the UK. |
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2. Registered email address |
All companies will have to provide Companies House with a registered email address. The email address will not be visible on the public register and will be used for the sole purpose of communication with Companies House. Companies incorporating on or after 4 March 2024, will have to provide a registered email address as part of the incorporation process. Existing companies need to provide the email address when they file their next confirmation statement with a statement date from 5 March 2024. NB: Group companies can use the same registered email address. |
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3. Registered office address |
All companies must now have an 'appropriate' registered office address (ROA). An appropriate address is one 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. A third-party agent's address continues to be appropriate if it meets the above criteria. This means companies can no longer use PO Box addresses. Companies House have been given additional powers to change non-complaint ROAs to a default address. The company must then provide a compliant address within 28 days. Failure to do so will run the risk of the company being struck-off the register.
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4. Statement of lawful purpose |
Going forward, all companies will have to confirm they exist for a lawful purpose. For companies incorporating on or after 4 March 2024, the subscribers will have to confirm the company is being formed for a lawful purpose including its intended future activities. For existing companies, this statement will be made as part of their annual confirmation statement and will relate to its future activities. |
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5. Greater powers of enquiry |
Companies House will have greater powers of enquiry and the ability to challenge and/or reject information received on behalf of the companies if it has reason to believe that such information presented to the Registrars is inaccurate, incomplete, or fraudulent. |
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6. Annotations to the Company Register |
Where satisfactory information is not forthcoming or received, Companies House will be empowered to flag inconsistencies and issues for further investigation by annotating the Company Register, which will provide public notice of compliance concerns. |
Future changes - what you need to know
There are further expected changes applicable to company administration that require further secondary legislation to be passed to bring them into force. However, companies and their advisers should be mindful of perhaps the most significant change in respect of the identity verification regime. Once implemented, all company directors and Persons with Significant Control (PSCs) will have to verify their identity with Companies House.
A final point to note is from 1 May 2024, there will be an increase of certain Companies House fees linked to its new enhanced role as a more active gatekeeper.
