The Economic Crime and Corporate Transparency Act 2023 (the ‘Act’) received Royal Assent on 26 October 2023, the Act aims to reduce economic crime by providing greater powers to UK authorities, including transforming Companies House by increasing the role and powers of the Registrar.
In the coming years, we can expect to see the Act being rolled out gradually. Companies House will introduce some changes this year in areas that they can move forward without system development, or secondary legislation.
Some of the measures expected this year are:
Companies are now required to provide both a valid registered office address and a registered email address.
Enhanced checks on company names, and the obligation for a declaration of lawful purpose on the incorporation of an entity and on annual confirmation statements.
The Registrar has greater powers to query and reject information submitted, improving register accuracy and reliability through data matching to detect and delete incorrect information, while also annotating potential issues for user awareness.
The Registrar will share data with other government agencies and law enforcement bodies to tackle economic crime and corporate fraud.
What are the key changes and expansion of the role and powers companies need to be aware of?
Greater powers
The Act provides the Registrar with powers to query and check information before placing it on the public register.
This means that Companies House will no longer be required to accept documents automatically, it also had the authority to query information already on the register. These powers stem from the Act’s overarching objectives for the Registrar to promote the integrity of the register, enshrined in the new section 1081A of the Companies Act 2006.
These objectives are:
To ensure that records kept by the registrar do not create a false or misleading impression to members of the public.
To ensure that anyone who is required to deliver a document to the registrar does so (and that the requirements for proper delivery are complied with).
To ensure information contained in the register is accurate and that the register contains everything it should contain.
To prevent companies and others from
a. carrying out unlawful activities, or
b. facilitating the carrying out by others of unlawful activities.
Under these objectives, the Act gives the Registrar:
Power to require those forming or running companies to supply additional information in relation to information they file at Companies House;
New powers to share data proactively with any persons for purposes connected with the Registrar’s functions or with other public authorities for purposes connected with their functions;
Increased powers to remove material from the register;
Greater authority to change the address of a company’s registered office and take action against those persistently failing to provide a suitable registered office address;
Ability to make rules requiring digital delivery of documents and filings.
Key Changes – Empowering Transparency
The reforms are a shift towards ensuring greater integrity and trustworthiness in the realm of business.
An overview of the key changes to be aware of:
1. Power to query and check information before placing it on the register
Under the new legislation, the Registrar has the power to reject and query new filings, along with the ability to question information already on the register. This will apply where information is identified as potentially fraudulent, suspicious, or might otherwise impact the integrity of the register.
Where a query is raised pre-registration, the filing will be rejected. Once the query has been addressed, the document can be resubmitted with evidence if needed.
If an inquiry arises post-registration, the recipient will be required to reply within a designated time frame.. Non-response or insufficient evidence could result in potential sanctions by the Registrar.
2. Power to query company names
The Registrar can reject an application for an incorporation or a change of name where:
The name could be used to facilitate certain crimes.
the name misleadingly suggests a connection with a foreign government or an international organisation (as defined in the Act); or the name comprises or contains computer code.
As it is unrealistic to expect every potential risk to be caught pre-registration, the Act gives the Registrar the power to direct existing entities to change their name, and, in the event of non-compliance, the power to determine and change the entity’s name.
3. Removal of information
The Act gives the Registrar discretionary power to remove material that impacts on the integrity of the register, some material however have legal consequences when registered, and as such, it is likely that in these situations it will remain a matter for the courts.
4. Registered office address
Companies will no longer be able to use a PO Box as their registered office address and must always have an appropriate address.
The Registrars discretionary power includes the ability to change a company’s address when they believe they are not authorised to use it.
Companies House fees are also set to increase from 01 May 2024, some increases are as high as 160% of previous fees.
Sometimes you just want an accountant to help answer some of your questions... let us help!
Comments