Further to our Wheelers Words in back in November 2022, the Economic Crime and Corporate Transparency Bill has progressed through parliament and on 26 October 2023 received Royal Assent becoming law.

A major part of this bill includes significant reforms to the role and powers of Companies House, these reforms will come into force in a phased way to allow for Companies House to develop their systems and introduce secondary legislation to support the changes.

The aim of the reforms is to help clamp down on fraud and money laundering and to give the public greater confidence in transactions held on the register.

Historically, Companies House have never had the ability to query documents which have been filed.  The Registrar has always had to accept information filed in good faith and place them on the register.

After the changes come into force, Companies House will no longer be a passive administrator of company information but a much more active gatekeeper.  Under the changes Companies House will have enhanced powers to:

• Check, remove and reject information.
• Investigate, cross-check and proactively share information (including with law enforcement agencies and other government departments such as HMRC).

Companies House may exercise their new powers where filings appear to contain:

• Errors, anomalies or inaccuracies that could be connected to fraudulent, suspicious or malicious activity; or
• Activity which might otherwise impact upon the integrity of the register.

Companies House will also have the power to refuse to accept and register a document if:

• It appears to be inconsistent with other information either held by or available to Companies House; and
• Companies House has reasonable grounds, to doubt it complies with any requirement as to its contents.

Summary of some of the significant changes

Accounts

• Small companies will no longer have the option to prepare and file abridged or filleted accounts. This will mean that they will be required to file both the directors’ report and profit and loss account. The changes to the requirements to file a profit and loss account have been included to assist creditors and consumers with making more informed decisions on a company based on their previous financial results.
• Micro-entities will continue to have the option to choose whether to file a directors’ report but will be required to file their profit and loss account.
• Dormant companies will be required to file an eligibility statement.

The following proposals in the white paper have been deferred and will happen at a later date:

• Accounting reference periods can only be shortened once every five years, unless good business reason.
• All company accounts will be encouraged to be filed digitally with full tagging where possible. Currently there is an option to file these by paper if you are unable to tag the accounts using software etc. The move to fully digital filing is hoped to increase efficiency and accuracy of the information filed.

Directors and Persons with Significant Control (PSC)

• All new and existing directors and PSC’s will need to verify their identity with Companies House.
• Corporate directors of UK companies will no longer be allowed unless they satisfy an exemption, which requires a) the corporate director to be a UK entity and have only natural persons on its board; and b) there to be at least one natural director sitting alongside the corporate director.
• Based on the above there can therefore be only one layer of corporate director in a group of companies.
• Directors must ensure their appointment is notified to Companies House within 14 days – otherwise they will have committed an offence.
• Shareholders who are not PSC’s will not need to verify their identity.  However, private companies will need to provide a one-off shareholders list to Companies House which is updated annually.

Company Records

• All companies must maintain a non-public “appropriate email address” where messages can reach a person acting on behalf of the company.
• A company must have a registered office address which is “appropriate”, meaning somewhere that documents delivered to it would be expected to come to the attention of a person acting on behalf of the company and can be recorded by obtaining an acknowledgement.
• Full names (and not abbreviations) of shareholders, subscribers and members must be noted in a company’s statutory register.
• The ability to have a company’s register of members held at Companies House will be withdrawn.
• Companies will no longer need to keep their own registers of directors, director’s residential addresses, secretaries, and PSCs (as they will have had to notify Companies House of all changes and Companies House records will essentially become the register).
• Individuals will be able to ask for certain additional information to be suppressed from the Companies House public record e.g., signatures, full dates of birth, residential addresses and professions.

Companies House fees are expected to increase to reflect the above changes but are likely to remain low relative to international standards.

Your usual Wheelers contact will keep you informed as any further announcements are made regarding these changes being implemented and how this will affect you and your company.

Article by Simon Welland