It's recently been announced that the Economic Crime and Corporate Transparency Act will reform the role of Companies House, to improve the transparency over UK companies. In this article, we highlight some of the changes proposed and provide guidance for businesses to remain compliant.
- Identity verification - it will become mandatory by autumn 2025 to verify the identity of all directors, officers, people with significant control, and certain other key officers with Companies House. It's possible to voluntarily verify such persons directly with Companies House now. Have you started the verification process/collating information to do so?
- Requirements for registered offices - since 4 March 2024, your company’s registered office address has had to be an appropriate address at all times. The address will need to meet the following criteria:
- If a document addressed to the company, and delivered to the address by hand or post, would be expected to come to the attention of a person acting on behalf of the company.
- The delivery of documents to the address is capable of being recorded by obtaining an acknowledgement of delivery.
If Companies House believes the address does not meet the above criteria they can change the address to a default address. If this happens you will have 28 days to provide an appropriate address otherwise Companies House can start the process to strike off the company. Is your company's registered office compliant?
- Registered email address - companies are also required to provide a registered email address (not visible publicly) for Companies House to use to contact companies about their filings. Have you done this?
- Registrar’s powers - the Economic Crime and Corporate Transparency Act 2023 has provided the registrar at Companies House with greater powers to query and challenge information that appears to be incorrect and annotations can be used to highlight these potential issues. These annotations could cause queries to be raised by potential investors in a funding round or buyers on an acquisition. In addition, Companies House can request further information and, if this request is ignored, there could be financial penalties and prosecution. It can also amend incorrect or misleading information including by removing documents from the public register.
- Statement of lawful purpose - when a company is incorporated, the new subscribers will need to confirm that they are forming the company for a lawful purpose. A similar confirmation will need to be provided on all confirmation statements to confirm that the company’s intended future activities are lawful. Is your confirmation statement due to be filed?
- Changes to accounts - over the next two to three years there will be a move away from paper or web-based filing of accounts. Instead accounts will need to be filed in a digital format using suitable software products. The timetable for this roll-out has not yet been released but companies should be given at least 21 months’ notice before the changes come in. There will also be changes to small and micro-entity companies account filing options and those companies claiming an audit exemption will need to give an additional statement on the balance sheet. Have you discussed this with your accountants?
- Failure to prevent fraud - an organisation will be liable where a specified fraud offence is committed by an employee or agent, for the organisation’s benefit, and the organisation did not have reasonable fraud prevention procedures in place. It does not need to be demonstrated that company bosses ordered or knew about the fraud. Have you put in place fraud prevention procedures?
Next steps for businesses
GOV.uk is a good starting point, and if legal advice is required please contact associate Emma Griffin-Davies. Sign up to our newsletter to stay up to date on the latest changes here.
