Posted: 28, March 2024 by Amy Richardson
Recent important changes with Companies House. The Economic Crime Transparency Act will introduce a number of changes, which is summarised below:
Improving the quality of data on Companies House Registers
The act will introduce new statutory objectives for the Registrar of Companies which they must promote when performing their functions. The act will also provide the registrar with a suite of new and enhanced powers, to enable them to meet their objectives.
The registrar’s objectives are:
- 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)
- To ensure information contained in the register is accurate and that the register contains everything it ought to contain
- To ensure that records kept by the registrar do not create a false or misleading impression to members of the public
- To prevent companies and others from carrying out unlawful activities or facilitating the carrying out by others of unlawful activities
These objectives also apply to the Registrar of Companies for Scotland and the Registrar of Companies for Northern Ireland.
Compnaies House were aiming to introduce some of these changes on 4 March 2024. The introduction of these changes needs secondary legislation so this date is still dependent on parliamentary timetables. It will not be earlier than 4 March 2024.
What’s changing and what this may mean for you:
Registered office addresses
From 4 March 2024, there’ll be new rules for registered office addresses which mean companies must, at all times, have an ‘appropriate address’ as their registered office. 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
- Any documents sent to that address can be recorded by an acknowledgement of delivery
These changes mean you will not be able to use a PO Box as your registered office address in the future. Actions will be taken against companies lacking a proper registered office address.
Statement of lawful purpose
There’ll be a new requirement when you register or ‘incorporate’ a company from 4 March 2024. The subscribers to the company will need to confirm they’re forming the company for a lawful purpose.
A company will also need to confirm its intended future activities are lawful, on their annual confirmation statement.
Registrar’s powers
From 4 March 2024, the registrar will have greater powers to query and challenge information that appears to be incorrect or inconsistent with information we hold. In some cases, they’ll also be able to remove information more quickly, if that information is inaccurate, incomplete, false or fraudulent.
There’ll be stronger checks on company names which may give a false or misleading impression to the public. This will help them improve the accuracy and quality of the data they hold and help to tackle the misuse of company names.
They’ll use annotations on the register to let users know about potential issues with the information that’s been supplied to them. They’ll also be taking steps to clean up the register, using data matching to identify and remove inaccurate information.
They’ll also start introducing a new identity verification process in 2024.
Enforcement and sanctions
There’ll be serious consequences if a company does not respond to a formal request from Companies House for more information. This could include:
- A financial penalty
- An annotation on the company’s record
- Prosecution
There could also be serious consequences for a company if their registered office is not an appropriate address.
If they’re satisfied a company’s registered office is not appropriate, they’ll change it to a default address, held at Companies House. If a company’s registered office is moved to the default address, they must provide an appropriate address with evidence of proprietary ownership within 28 days, or they could start the process to strike the company off the register.
Confirmation Statement Changes:
Every company, including dormant and non-trading companies, must file a confirmation statement at least once every year. It confirms the information we hold about the company is up to date.
Companies must file a confirmation statement even if there have not been any changes during the review period.
They’re aiming to introduce the changes to the confirmation statement on 4 March 2024. The introduction of these changes needs secondary legislation so this date is still dependent on parliamentary timetables. It will not be earlier than 4 March 2024.
Registered email address
Under the act, all companies will need to provide a registered email address. Companies House will use this email address to communicate with the company – it will not be available to the public.
New companies will need to give a registered email address when they incorporate, from 4 March 2024.
Existing companies will need to give a registered email address when they file their next confirmation statement, with a statement date from 5 March 2024 onwards.
Statement to confirm the company is lawful
All companies will need to confirm that the intended future activities of the company will be lawful.
You’ll need to confirm this every year on the confirmation statement. You will not be able to file a confirmation statement without this statement.
This will apply to all confirmation statements with a statement date from 5 March 2024 onwards.
Identification Verification
Companies House will introduce a new identity verification process to help deter those wishing to use companies for illegal purposes.
Anyone setting up, running, owning or controlling a company in the UK will need to verify their identity to prove they are who they claim to be.
Over the coming months, we’ll explain when these changes will come into effect and how the identity verification process will work. You do not need to do anything yet.
Who needs to verify their identity
For new companies, all directors and people with significant control (PSCs) will need to complete identity verification.
Identity verification will also apply to other registration types. For example, any members of a limited liability partnership (LLP) will also need to verify their identity.
For existing companies, all directors (or equivalent) and PSCs will have a transition period to verify their identity with Companies House.
Anyone acting on behalf of a company will also need to verify their identity before they can file information with us.
You can verify directly with Companies House, or through an authorised agent.
Verifying your identity directly with Companies House
Companies House will put in place a service to verify your identity using ID documents, such as a passport. There will be a range of support and services available to help you complete this process.
Verifying your identity through an authorised agent
Companies House authorised agents, also known as Authorised Corporate Service Providers (ACSPs), are individuals or organisations that undertake anti-money laundering (AML) supervised activity, such as:
- Company formation agents
- Solicitors
- Accountants
Authorised agents already have a duty to carry out due diligence checks on all their clients. The Companies House identity verification process will build on these existing checks.
Changes to Accounts
Filing accounts by software only
As part of our journey to modernise and digitise our filing routes, the way you file your annual accounts with Companies House is changing.
We’ll soon be transitioning towards filing accounts by software only. This will allow more efficient and secure filings for companies, and will improve the quality of the data on the register. Software-only accounts filing will create a single, cost-effective, sustainable and traceable way to file.
The new legislation lays the foundation for Companies House to require companies to file accounts in a digital format. To comply with these changes, all companies will need to find suitable software before web-based and paper filing options are no longer available.
This applies to directors who file accounts themselves, and companies who use third party agents or accountants to file their annual accounts.
The move to filing accounts by software only will be phased in over the next 2 to 3 years. We’ll share the timetable for the roll-out of software-only filing soon.
Most companies can make the change now as software is already available. There are many software providers who offer a range of accounting packages to prepare and file accounts.
Most types of accounts can be filed using software, depending on the functionality of the software package you’re using. We’re working with software companies to develop a solution for complex package accounts, which are currently filed on paper.
Software-only filing supports the goal of a fully digital filing service and helps to meet our organisational priority to prevent economic crime and bring the UK in line with international best practice.
Changes to small company filing options
They’re streamlining the accounts filing options for small and micro-entity companies.
Small and micro-entity companies will need to file their profit and loss accounts. The detail of what they will need to include will be set out in secondary legislation. Small companies that do not qualify as micro entities will also need to file a directors’ report.
We’re also removing the option to file ‘abridged’ accounts.
Claiming an audit exemption
Any company claiming an audit exemption will need to give an additional statement from their directors on the balance sheet.
Directors will need to specify which exemption is being claimed, and confirm that the company qualifies for the exemption.
Protecting your Information
The Economic Crime and Corporate Transparency Act has introduced measures to prevent abuse of personal information held on the Companies House register.
One of the aims is to balance the need for corporate transparency with the understanding that personal information should only be published when it’s necessary and proportionate to do so.
These measures will come into force over the next two years in a phased approach.
Suppression of personal information
Under the act, individuals will be able to apply to suppress the following information from historical documents:
- Residential addresses in most instances when shown elsewhere on the register (for example, when used as a registered office address)
- Day of birth for documents registered before 10 October 2015 (only the month and year of birth have been publicly displayed since 10 October 2015)
- Signatures
- Business occupation
Protection of personal information because of risk of harm
Individuals at personal risk of physical harm or violence as a result of their personal information being on a Companies House public register (for example, domestic abuse survivors) will be able to apply to have their information protected from public view.
The information that can be protected from public view includes:
- Name (or previous names)
- Sensitive addresses where public disclosure puts its residents at risk (for example, a women’s domestic abuse refuge)
- In the most serious cases, all other details, for example, service address and partial date of birth
These measures will all need secondary legislation before they’re implemented.
Changes to Limited Partnerships
Under measures introduced by the Economic Crime and Corporate Transparency Act, limited partnership (LP) information will be more accessible and transparent.
When the measures come into force, LPs must:
- Provide partners’ names, date of birth and usual residential address
- Verify the identity of general partners
- Provide a registered office within the UK
- Provide a standard industrial classification (SIC) code
- File an annual confirmation statement
LPs will need to file their information through an authorised agent (also known as an Authorised Corporate Service Provider) that’s registered with Companies House. This is to make sure the data is trustworthy and fit for purpose.
There’ll be new powers to:
- Close and restore limited partnerships
- Apply sanctions
- Protect partners’ information
- Operate a statutory compliance process
These measures will need secondary legislation before they’re implemented.
Improving Transparency of Company Ownership
Under measures introduced by the Economic Crime and Corporate Transparency Act, company ownership will be more transparent.
When the measures come into force, companies must:
- Record the full names of shareholders who are individuals – or the full names of corporate members and firms – in their registers
- Provide a one-off full shareholder list so Companies House can display shareholder information in a more user-friendly way
Companies House will:
- Collect and display more information from companies claiming an exemption from providing person with significant control (PSC) details, including the reason for the exemption
- Collect and display the conditions which allow a relevant legal entity (RLE) to be recorded as a PSC
There will also be restrictions on the use of corporate directors. Only UK corporate entities with ‘legal personality’ can be appointed as corporate directors. The directors of these corporate directors must be natural persons and must verify their identity
If you have any questions about any of the above changes and how they affect you or your business, please do not hesitate to contact us.