The UK's registrar of companies, Companies House, is undergoing a transformation. While transparency and ease of doing business have always underpinned UK policy, Companies House is now addressing growing concerns that the UK's framework is open to misuse. The main areas of focus are:
- accuracy of information held at Companies House;
- abuse of personal publicly available information; and
- misuse of UK registered entities as vehicles for crime.
The catalyst for the corporate transparency and register reforms is a public consultation conducted by The Department for Business, Energy and Industrial Strategy (BEIS) and Companies House. Its outcomes include proposals to:
- enhance the role of Companies House by extending the information required to be publicly disclosed;
- increase checks on the accuracy and provenance of information; and
- improve the exchange of intelligence between Companies House and law enforcement agencies.
1. Who is in control of the company?
In a bid to prevent UK companies being used as vehicles for crime, Companies House is proposing to strengthen its verification of directors, people with significant control (PSCs) and presenters (e.g. lawyers) during the incorporation and filing processes. The proposals may subsequently be extended to shareholders. This represents a significant change from the position today, where Companies House largely accepts information filed against a company (and the presenter's authority to submit it) on "good faith".
In the future, filings may not be accepted if a presenter fails to evidence its identity, and shareholders will have to provide more detailed information such as home/registered address and (in the case of individuals) date of birth. PSCs will be required to provide identity verification documentation to Companies House, and face sanctions for non-compliance.
It is proposed that these checks will apply not only to new companies and their directors, but also to existing entities.
2. Improving the accuracy and usability of public information
It is proposed that Companies House's powers will be extended to allow it to check, and challenge, information before updating the register, with authority to require further evidence of that information's accuracy.
The presentation and accessibility of company accounts data is also set to be improved. The consultation envisages standardised data tagging within company accounts in order to make key financial information easier to extract. Perceived abuses of the accounts filing process, such as habitual changes to accounting reference dates, also come under fire in the consultation.
3. What about my personal information?
While the consultation looks to extend the amount of information (including personal and sensitive information) that companies and their officers are required to disclose, only a small proportion of this will be publicly available. This will effectively create two registers: a front-end register which is publicly accessible, and a back-end with non-public information. Credit agencies will continue to enjoy limited rights, with wider access available to public authorities.
4. Ensuring compliance, sharing intelligence and other measures to deter abuse of corporate entities
In a bid to combat crime, BEIS plans to promote collaboration between Companies House and law enforcement partners by empowering Companies House to share, and cross-check, registered information against that held by other government and private sector bodies. This complements the new fifth Anti-Money Laundering Directive which requires obliged entities (including lawyers) to report discrepancies between information they hold/discover and information filed at Companies House regarding beneficial ownership.
To support money laundering investigations, companies may also be required to provide bank account details, and even to notify Companies House within 14 days of opening a non-UK bank account.
Company officers may have to prioritise their roles, as the proposals also include a cap on the number of concurrent directorships an individual can hold. This is a response to concerns about conflicts of interest, and how diligently someone can fulfil their duties whilst holding numerous posts.
5. We've heard it all before; these are just proposals, wake me up when the rules are in force
Implementation will require primary legislation to be enacted by Parliament, so these changes (if they survive responses to the consultation) will not be made overnight. The proposed reforms also represent a significant and complex change to the way Companies House operates, requiring significant enhancements of IT systems and additional resources. More concrete proposals are awaited, but in the short term we may see an increase in Companies House filing fees as it prepares for an extreme overhaul of the register and its operations.
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