UK Companies House announced on 4 March that the first measures under the Economic Crime & Corporate Transparency Act 2023 (ECCTA) had been brought into force with the implementation of new powers to query information, establish lawful purpose, share information, and challenge and change company names.
The ECCTA builds on the Economic Crime (Transparency and Enforcement) Act, which introduced the Register of Overseas Entities in August 2022. Together, both acts are a major step forward in tackling economic crime and improving corporate transparency.
The ECCTA targets reform of Companies House alongside measures to reform the identification doctrine and the introduction of a new offence of failing to prevent fraud. The act gives Companies House the power to play a more significant role in tackling economic crime and supporting economic growth. Over time, the measures will lead to improved transparency and more accurate and trusted information on our registers.
Companies House will have the power to investigate, challenge and remove information that is provided to it, both at the time of incorporation of a new company and retrospectively in respect of existing companies. It will also be able to request supporting evidence.
Companies will be required, at all times, have an 'appropriate address' as their registered office, which will no longer include the use of PO Boxes. If a company's registered office is not deemed appropriate, it will be changed to a default address and, if an appropriate address with evidence of proprietary ownership is not provided within 28 days, the process to strike the company off the register can be commenced. Companies will also be required to have an 'appropriate' email address.
For companies incorporated after 3 March 2024 subscribers will be required to declare that they are forming the company for a lawful purpose, and that the intended future activities are lawful as part of their annual confirmation statement.
The ECCTA enables Companies House to impose stronger checks on company names that may give a false or misleading impression to the public. The new measures build on existing controls on company names covering similarity of names and restricted terms.
It introduces new powers for Companies House to reject an application to register a name that is intended to facilitate fraud, is comprised of, or contains computer code, or which suggests a connection with a foreign government or international organisation.
If a company fails to change its name within 28 days, Companies House can now determine a new name for the company (for example, by changing the company name to its registered company number) and can also suppress a name from the register while a company responds to a direction to change its name.
Companies House will further have the ability to share data with other government departments and law enforcement agencies.
Penalties for non-compliance and for failing to respond to a formal request from Companies House for information will include financial penalties, annotations on a company's record, or prosecution.
Companies House said it would continue to implement more changes over the coming years, including identity verification for all new and existing registered company directors, people with significant control (PSCs) and those who file on behalf of companies; enhancing the protection of personal information to protect individuals from fraud and other harms and streamlining accounts filing options for small and micro entity companies, and transitioning towards filing accounts by software only.
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