The Economic Crime and Corporate Transparency Act 2023 (ECCTA) represents a pivotal reform in the UK's corporate regulatory landscape, aiming to enhance transparency, combat economic crime, and bolster trust in the business environment. As a corporate service provider, understanding and adapting to these changes is crucial for ensuring compliance and supporting clients effectively.
Key Developments Under ECCTA
1. Identity Verification Regime (IDV)
A key feature of the Act is the introduction of a formal identity verification system (IDV). Effective from 8 April 2025, the regime has been introduced for:
- Directors and persons with significant control (PSCs) of UK companies
- Members and controllers of limited liability partnerships (LLPs)
- Certain limited partnerships and overseas companies with a UK establishment
From April 2025, individuals will be able to complete verification directly through Companies House or indirectly via an authorised Corporate Service Provider (CSP). Those already listed will need to comply within a one-year window starting autumn 2025, with the verification process becoming embedded in the regular annual filings. By Spring 2026, identity verification will be mandatory for all individuals filing documents at Companies House.
2. Enhanced Powers for Companies House
The Act significantly expands the role of Companies House, it is no longer just a registrar it now plays a frontline regulatory role. The Act gives it extended oversight powers and authority to:
- query and reject information that appears incorrect or fraudulent;
- impose financial penalties up to £10,000; and
- collaborate with law enforcement agencies.
These measures aim to ensure the accuracy and reliability of information on the public register, thereby strengthening the UK's business environment. For service providers, this means enhancing internal verification protocols and tightening the quality control on filings submitted on behalf of clients.
3. Increased Transparency Requirements
From Autumn 2025, private companies will be required to:
- provide full names of shareholders without abbreviations; and
- for traded companies, disclose individuals or entities holding 5% or more of any class of issued shares.
These provisions aim to improve transparency over corporate entities, supporting greater accountability and help prevent anonymous control of corporate structures.
Implications for Corporate Service Providers
As facilitators of corporate compliance, service providers must:
- Ensure clients are aware of and adhere to the new IDV requirements.
- Assist in the verification process, either directly or as a CSP.
- Update internal processes to align with Companies House's enhanced scrutiny.
- Maintain accurate and up-to-date records to meet the increased transparency obligations.
Proactive engagement and adaptation to these reforms are essential to support clients effectively and uphold the integrity of the UK's corporate framework.
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.
