The Economic Crime and Corporate Transparency Bill, published 22 September 2022, proposes fundamental changes to Companies House. The government intends these changes to improve data reliability at Companies House and deter money laundering and fraud.
The bill is currently in the final stages of amendment, with a further reading at the House of Lords due 18 October 2023. It is expected to receive royal assent late this year with reforms implemented in a phased manner thereafter. The exact timing as to when each section of the bill will become law is not yet clear.
What Are the Reforms?
1. Identity Verification
The bill proposes that, inter alia, the following individuals will be required to have their identities verified at Companies House:
- All new and existing directors of companies, members of limited liability partnerships and general partners of limited partnerships.
- Persons with significant control (PSCs).
- A relevant officer of registrable relevant legal entities (RLEs).
- All persons making filings at Companies House on behalf of an entity.
Individuals can either verify their identities themselves or do so via an authorised corporate service provider (ACSP) — an intermediary, such as a law firm or accountant that is registered with a supervisory body. ACSPs who are individuals (rather than firms) also will need their identities verified in order to file at Companies House.
Once the bill receives royal assent, all new entities will need relevant individuals to have their identities verified on incorporation.
It is anticipated that existing directors will be required to verify their identities on delivery of the company’s first confirmation statement after the bill is made law. A transitional period for identity verification of existing PSCs and RLEs is expected to be set out in secondary legislation.
Where a director of a company acts without first having their identity verified, an offence will be committed by the individual, the relevant company and every officer who is in default. There are parallel offences as relates to non-verification of PSCs and other individuals who are required by the legislation to have their identities verified.
All accounts will need to be digitally submitted to Companies House and tagged using standard labels for the reporting of financial data (iXBRL).
Small companies will be required to file audited annual accounts unless they benefit from an audit exemption. Micro-entities will be required to file accounts including balance sheet and profit and loss (and may choose to file a director’s report).
Small companies will no longer be able to file abridged or filleted accounts.
3. Registered Office and Email Address
The bill envisages that a company’s registered office should be an appropriate address where documents will come to the attention of someone acting on behalf of the company and acknowledgment of delivery can be recorded.
Companies also will be required to keep an appropriate email address with Companies House, although this will not be available for public inspection.
4. Statutory Registers
The bill abolishes the requirement for companies to maintain various internal registers, including the register of directors, register of directors’ residential addresses, register of secretaries and PSC register. Companies still will be required to maintain a register of members.
Directors should be cognisant of the above proposals and contact their legal advisers for an impact assessment and suggestions of how best to prepare for the bill passing into law.
It is vital that directors be aware that they will no longer be able to file for or incorporate companies without a verified account. Whether verification is carried out via an ACSP or by the director, the process is likely to be an involved one and will require uploading identification documents to Companies House.