The Economic Crime and Corporate Transparency Act (ECCTA), which received royal assent on 26 October 2023, has set out new responsibilities for directors, PSCs and anyone who files on behalf of a company. It has granted Companies House more powers with the intention of reducing economic crime, supporting economic growth, improving transparency and increasing the accuracy of information held on Companies House registers. This article will set out the new filing requirements and summarise the new powers available to Companies House.
Accuracy and quality of data on the registers
Registered Office Address
The new rules concerning registered office addresses mean that companies must, at all times, have an 'appropriate address'. An appropriate address means an address where:
- any documents sent to the registered office should be expected to come to the attention of the person acting on behalf of the company; and
- any documents sent to that address can be recorded by an acknowledgment of delivery.
Companies will no longer be able to use a PO box as a registered office address. This will also impact the use of an accountancy firm's address as a company registered office address as it is unlikely that documents sent to a third-party accountancy firm address will come to the attention of the person acting on behalf of the company. If a company does not have an appropriate registered office address, Companies House will have the power to change the company's address to a default address. The company will then have to provide an appropriate address along with evidence of proprietary ownership of that address within 28 days. If an appropriate address and proof of ownership is not provided within that time frame, Companies House can then start the process to strike the company off the register.
Statement of lawful purpose
Under the new provisions, upon incorporation, any subscribers to a new company will need to confirm that the company is being formed for a lawful purpose. The company will also need to confirm on every annual confirmation statement that the intended future activities of the company are lawful.
Registrar's powers
The Registrar will have greater powers to query and challenge information that appears to be incorrect or inconsistent with information held by Companies House. If any information is incorrect, false, misleading, fraudulent or incomplete, the Registrar will have the power to remove that information. In our experience, it is fairly common for inaccurate information to be held on the register. Most of the time this is simply due to a mistake, an error or simply a misunderstanding of what is required to be filed. With the Registrar being given these greater powers, it will be imperative that any information provided to Companies House in respect of a company is correct and up-to-date.
Companies House is also implementing stronger checks on company names to ensure that they do not give a false or misleading impression to the public.
Formal requests for information
Companies House will have the right to send out formal requests for information. Penalties for not responding to a formal request from Companies house include fines, an annotation on the company's record and prosecution. It is imperative that any formal request received in respect of a company is dealt with in an accurate and timely manner.
ID Checks on incorporation
With the intention of deterring companies being set up for illegal purposes, Companies House is introducing a new identity verification process.
In respect of new companies, all the directors and PSCs will need to verify their identity to be able to incorporate a company. Any members of a limited liability partnership will also need to verify their ID.
There will be a transition period for directors and PSCs of existing companies to verify their ID with Companies House. Currently, details regarding this transition period are unknown; Companies House will be issuing further guidance on this shortly.
Anyone acting on behalf of a company will also have to verify their ID with Companies House.
Companies House intend to put a service in place so that the relevant people can directly verify their ID with Companies House using ID documents such as a passport. Companies House will provide an update on this service shortly.
Accounts
Companies House are implementing a system whereby company accounts can only be filed in a digital format. Companies will need to acquire suitable software before the web based and paper filing options cease to be available. At this stage, it is not clear exactly what the requirements of that software will be. The transition to a fully digital format is to be phased in over the next two to three years. Companies House will shortly release the timetable for the roll-out along with further guidance shortly.
Companies House advises that most companies could make the change to fully digital accounting now as there are many software providers on the market who offer a range of accounting packages that facilitate digital filing of accounts.
Small company filing options
Small and micro-entity companies will need to file their profit and loss accounts at Companies House. Further detail on exactly what will need to be filed by small and micro-entity companies will be set out in secondary legislation at a future date.
Small companies that do not qualify as micro-entities will also need to file a directors' report.
Filing abridged accounts will no longer be an option.
Directors will need to make an additional statement if a company is claiming an audit exemption. This statement will need to be on the balance sheet and specify which exemption is being claimed and confirm that the company meets the qualifying criteria.
Confirmation statements
Companies will need to have a registered email address which Companies House will use to communicate with the company; this email address will not be made available publicly. From early 2024, a registered email will need to be confirmed on incorporation of any new company. Existing companies will need to confirm a registered email when they file their next relevant confirmation statement.
From early 2024, companies will need to confirm that the future activities of the company will be lawful on every annual confirmation statement.
Personal information
Under the act, individuals will be able to apply to supress certain information from historical information. This includes residential addresses, for example, where a residential address is used as a registered office address; the day of birth, which may appear on documents registered prior to 10 October 2015 (only month and year has been displayed since 10 October 2015); signatures; and business occupation.
Individuals who are at risk of physical harm or violence can apply to have certain information protected from public view. This information includes names and sensitive addresses and, in the most serious cases, all other details.
Secondary legislation needs to be enacted before these measures are implemented.
Applications will need to be made to Companies House and will be subject to a fee.
Limited Partnerships (LPs)
Once the measures come into force, LPs must:
- provide all partners' names, dates of birth and usual residential addresses;
- verify the identity of general partners;
- provide a registered office within the UK;
- provide a standard industrial classification (SIC) code; and
- file an annual confirmation statement.
LPs will be required to file their information through an authorised agent that is registered with Companies House.
Companies House will have new powers to close and restore LPs, apply sanctions and protect partners' information. They will also operate a statutory compliance process.
Secondary legislation will be required before these measures are implemented.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.
