What directors need to know about the new legislation
Every business owner and director in the UK has to interact with Companies House at some level.
Whether it’s submitting an annual statement or updating the register on essential details of their business personnel and ownership structure, it’s a crucial public data source that also allows customers to research businesses and individuals before investing or purchasing with them.
Unfortunately, criminals have misused UK companies and their details in order to commit fraud, launder money and pursue other forms of economic crime.
So this is why new legislation has come into force on March 4th which has been described as the most significant change for Companies House in its 180 year history.
Under the Economic Crime and Corporate Transparency Act 2023 (ECCT Act), directors and business owners will be able to report and remove personal information that has been misused such as when their name or address had been used without their consent.
The new changes that have come into force include:-
- Greater powers to query information and request supporting evidence
- Stronger checks on company names
- New rules for registered office addresses – all companies must now have an appropriate address at all time – they will not be able to use a PO Box as their registered office address
- A requirement for all companies to supply a registered email address
- A requirement for subscribers to confirm they’re forming a company for a lawful purpose when they incorporate, and for a company to confirm its intended future activities will be lawful on its confirmation statement
- Greater powers to tackle and remove factually inaccurate information
- The ability to share data with other government departments and law enforcement agencies
New criminal offences and civil penalties will complement the measures being introduced with priority focus being given to cleansing the register to remove details of those appointed without consent.
Other measures announced in the act such as identity verification and accounts reform will be introduced over a longer period.
The new requirements are being phased in to minimise disruption and hassle for existing legitimate businesses with many changes being integrated into the existing reporting cycles, such as the legal requirement to update a company’s confirmation statement.
Business Minister Kevin Hollinrake MP said: “Companies House now has the tools to take a much harder line on criminals who take advantage of the UK’s open economy and can now ensure the reputation of our businesses is not tarnished by the UK playing host to the world’s scammers.
“The new reforms, which come into effect today, provide further protection to the public from companies fraudulently using their address and will begin to remove the smoke and mirrors around companies hiding behind false information.
“This will enhance the UK’s reputation as a great and safe place to do business.”
Companies House also announced that they would be amending their fees from May 1st 2024 to bring them into line with the costs of providing services and to recover the costs of the new powers being introduced.
Their fees are set on a cost recovery basis which means although they don’t make a profit, they have to cover the costs of the services they deliver.
We’ve previously written about how directors should be scrupulously honest and up front with Companies House especially in relation to closing or dissolving their business.
Now that they’re being granted additional legal powers we’ll be giving this advice even stronger prominence when we advise business owners and directors on how to strengthen and improve their firms.
We’ll arrange a convenient time to speak to you either on the phone or remotely and once we get a clearer idea of your unique situation and circumstances we’ll be able to work with you on creating a realistic roadmap to get you closer to where you want to go.