Economic Crime and Corporate Transparency Act: outline transition plan for Companies House

Question 1

Background

Accepted Answer

The Economic Crime and Corporate Transparency Act (2023) (‘The Act’) will reform the role of Companies House and improve transparency over UK companies and other legal entities to strengthen our business environment, support our national security and disrupt economic crime, while delivering a more reliable companies register to underpin business activity. This legislation brings Companies House and our legal framework into line with modern day challenges.

The Act introduces the biggest changes to Companies House since corporate registrations were established in 1844 and will enable us to play a much stronger role in making the UK a great place to do business.

Question 2

Registrars’ objectives

Accepted Answer

There are 3 registrars of companies in the UK:

The Registrar of Companies for England and Wales is based at Companies House, Cardiff, and is responsible for the registration of companies in England and Wales
The Registrar of Companies for Scotland is based at Companies House, Edinburgh, and is responsible for the registration of companies in Scotland
The Registrar of Companies for Northern Ireland is based at Companies House, Belfast, and is responsible for the registration of companies in Northern Ireland

The legislative changes are underpinned by a new set of objectives for the registrars. They provide a framework for how we operate as an organisation, from guiding our decision making to exercising our new powers.

Objective 1

To ensure that any person who is required to deliver a document to the registrar does so (and that the requirements for proper delivery are complied with).

Objective 2

To ensure that information contained in the register is accurate and that the register contains everything it ought to contain. This reference to ‘the register’ includes any records kept by the registrar under any enactment.

Objective 3

To ensure that records kept by the registrar do not create a false or misleading impression to members of the public.

Objective 4

To prevent companies and others from:

carrying out unlawful activities, or
facilitating the carrying out by others of unlawful activities

Question 3

Overview

Accepted Answer

The Act gives Companies House the power to play a more significant role in disrupting economic crime and supporting economic growth. Over time, the measures will lead to improved transparency and more accurate and trusted information on our registers.

There’ll be new responsibilities for:

all new and existing company directors
people with significant control of a company (PSCs)
anyone who files information on behalf of a company

This is a large and complex set of changes which will be introduced in phases over the coming years. The ongoing operation of the changes will be paid for by an increase in Companies House fees, on a cost recovery basis. We review our fees every year to make sure they’re set at the right level. We increased some of our fees on 1 May 2024.

This programme of change has a number of distinct strands, starting with increased powers which will let us begin the process of cleaning information on the existing registers and querying new information as it is submitted to us. This started on 4 March 2024, with work ongoing over a number of years as we remove incorrect or fraudulent information from the register in priority order. We will take an iterative approach and will be testing, monitoring and recalibrating new processes.

From 4 March we had increased powers to analyse and share data with law enforcement agencies and other government departments. By the latter part of 2024, we will have implemented the power to sanction new offences.

Identity verification is a major component of the reforms and involves significant system development for the more than 7 million individuals who will go through these checks. By spring 2025, we will introduce the first step by allowing Trust and Company Service Providers (TCSPs) and other professional service providers (such as accountants and solicitors), who are registered for Anti Money Laundering with a supervisor in the UK, to register to become Authorised Corporate Service Providers (ACSPs). This will allow them to carry out verification services for their clients and provide these details to the registrars.

By autumn 2025 we will commence the new identity verification requirements where all directors and PSCs for new incorporations will be required to verify their identity at the point of incorporation. There will be a transition period of 12 months for existing companies who will be required to provide identity verification credentials for their directors and PSCs when their confirmation statement is due.

Reforms to limited partnerships (LPs) will take place no sooner than spring 2026 meaning their information will be more accessible and transparent. Further transparency of company ownership will be improved by the publication of more information on shareholders. We know this will be a significant undertaking for some companies and we are currently working through the implementation options.

Lastly, following an extensive formal notice period, we will require all accounts to be delivered to us via software. We are not yet in a position to announce the commencement of the formal notice period due to the complexity of these changes, but we will do as soon as we are able.

Question 4

Implementation

Accepted Answer

While the scale and scope of these changes should not be underestimated, the work already done through our wide-ranging and ongoing transformation programme puts us in a strong position to implement them as quickly and efficiently as possible. However, the changes to Companies House are technically and operationally complex and many require the ongoing collaboration from expert stakeholders.

It is not currently possible to set a firm timetable for implementation of all measures as some require secondary legislation. Around 50 statutory instruments will be commenced over 18 months with implementation activity and transitional periods continuing until completion in 2027. Timelines are dependent on suitable Parliamentary time in both houses and will be kept under review.

While we understand the need for swift action, unforeseen challenges may extend the timelines. We are committed to upholding the integrity and effectiveness of the legislation. On occasion, developing complex services and systems to support this may require us to adjust planning and delivery timelines.

This document will be updated to reflect current planning assumptions.

Question 5

Communicating the changes

Accepted Answer

A comprehensive communications exercise is taking place to inform customers and their agents of the new requirements with plenty of notice. It’s important that companies make sure their registered email address is correct and that emails are monitored.

The Companies House Changes to UK company law website details the changes and what customers and/or their agents need to do and by when. You can also get the latest information by subscribing to our newsletter.

Question 6

Summary of changes

Accepted Answer

This is the current intended timetable. Timelines are dependent on suitable Parliamentary time in both houses and will be kept under review.

From 4 March 2024

Companies House has been able to improve the quality of information on the register by:

querying and rejecting new information received in customer filings which we suspect to be wrong or fraudulent
removing more inaccurate information from the register, including removing names and addresses of citizens which have been used without consent – the processes for removing information are being streamlined and more information can be removed administratively, without people needing a court order
querying and rejecting company names which have been chosen to mislead customers, facilitate fraud, or give the false impression that the company is connected to a foreign government
improving the accuracy and reliability of registered office addresses by introducing a new definition for an appropriate address (companies are not able to use a Royal Mail PO Box and equivalent services offered by other parties) – we will be able to commence strike off measures against companies if they do not provide an appropriate address within a specified period

Companies House has been able to improve investigation, enforcement and data sharing by:

sharing more information with law enforcement agencies and regulatory bodies to help tackle money laundering, fraud and other criminality
undertaking greater analysis of information held, including comparison against other data sets obtained externally

Companies House has been able to better prevent disqualified directors from acting by:

rejecting documents notifying appointment of a new director to an existing company where the individual is a disqualified director

Companies House has also been able to require companies to:

provide a registered email address to allow Companies House to contact companies about matters relating to their filing quickly and efficiently (this email address will not be shared on the public register)
confirm that the future activities of the company are lawful at the point of incorporation, and to confirm this every year on the confirmation statement