Get ready for changes to UK company law
“Companies House is an executive agency of the Department for Business and Trade. We incorporate and dissolve limited companies. We register company information and make it available to the public. We are approaching a pivotal moment in our history.
The Economic Crime and Corporate Transparency (ECCT) Act will fundamentally change our role and our purpose and will give us the powers we need to play a more significant role in tackling economic crime”.
The Economic Crime and Corporate Transparency Act will give Companies House the power to play a more significant role in tackling economic crime and supporting economic growth. This is one of the most significant moments in the history of Companies House. But how will these changes affect you and your company? Kenny Logan from our Edinburgh office explains in this article.
The Economic Crime and Corporate Transparency Act became law in October 2023. Since then, Companies House has been getting ready to introduce the measures brought in by the act.
Companies House aims to introduce the first set of changes on 4th March 2024. The introduction of these changes needs secondary legislation, so this date is still dependent on parliamentary timetables. However, it will not be before the 4th March 2024.
These changes include:
• Greater powers to query information and request supporting evidence.
• Stronger checks on company names.
• New rules for registered office addresses.
• A requirement for all companies to supply a registered email address.
• A requirement for all companies to confirm they’re forming the company for a lawful purpose when they incorporate, and to confirm its intended future activities will be lawful on their confirmation statement.
• The ability to annotate the register when information appears confusing or misleading.
• Taking steps to clean up the register, using data matching to identify and remove inaccurate information.
• Sharing data with other government departments and law enforcement agencies.
What will these early changes mean for you?
Companies and intermediaries will want to make sure they are ready for the changes so that they can take action at the right time. Anyone thinking about incorporating a company should also be keeping a keen eye on developments.
Here are 3 of the key changes that you should prepare for:
• New rules for registered office addresses.
• Requirement for all companies to supply a registered email address.
• New lawful purpose statements
1. New rules for registered office addresses
From 4th March 2024, there will be new rules for registered office addresses which mean that companies must have an ‘appropriate address’ as their registered office at all times. An appropriate address is one where:
• Any documents sent to the registered office should be expected to come to the attention of a person acting on behalf of the company.
• Any documents sent to that address can be recorded by an acknowledgement of delivery.
These changes mean you will not be able to use a PO Box as your registered office address from 4th March 2024. You can still use a third-party agent’s address if they meet the conditions for an appropriate address.
If you are currently using a PO Box as your registered office address, you will need to change it by 4th March 2024. You can change your company’s registered office address online, using your company’s authentication code.
Companies that do not have an appropriate registered office address could be struck off the register. When Companies House identify an inappropriate registered office address, they will change it to a default address held at Companies House. The company must then provide an appropriate address, with evidence of a link to that address, within 28 days. If they do not receive this evidence, Companies House will start the process to strike the company off the register.
2. Registered email address
From 4th March 2024, there will be a new requirement for all companies to give a registered email address to Companies House. This email address will not be published on the public register.
From 4th March 2024, new companies will need to give a registered email address when they incorporate. Existing companies will need to give a registered email address when they file their next confirmation statement with a statement date from 5th March 2024. The online services will prompt you to supply a registered email address when you file your next eligible confirmation statement.
Companies House will use this email address to communicate with you about your company, so it’s important that you choose an appropriate email address. You can register the same email address for more than one company.
You will be able to change your registered email address through their new ‘update a registered email address’ service. You will need to be signed in and authenticated to do this.
Companies will have a duty to maintain an appropriate registered email address, in the same way as their registered office address. Any company that does not do this will be committing an offence.
3. Statement of lawful purpose
When you incorporate a company from 4th March 2024, the subscribers (shareholders) will need to confirm they are forming the company for a lawful purpose.
You will also need to confirm the company’s intended future activities are lawful on the confirmation statement.
The intention of these new statements is to make it clear that all companies on the register, new and existing, have a duty to operate in a lawful way. Companies House may take action against your company if they receive information that confirms you are not operating lawfully.
Companies House will not accept your documents if these statements have not been confirmed.
From 4th March 2024, you will see these new statements when you incorporate a company or file a confirmation statement.
What will it mean?
Companies House will now play a much greater role in disrupting economic crime and preventing abuse of the register, while supporting economic growth and ease of doing business in the UK.
The measures set out in the act will give them new and enhanced powers to improve the quality and reliability of its data.
Companies House will also be able to act more quickly if people tell them that their personal information has been used on the register without their consent. This will make a real difference to individuals.
The measures include introducing identity verification for all new and existing registered company directors, people with significant control, and those who file on behalf of companies. Broadening its powers to become a more active gatekeeper over company creation and a custodian of more reliable data.
It will improve the financial information on the register so that the register is more reliable and accurate, reflects the latest advancements in digital technology, and enables better business decisions.
It will provide Companies House with more effective investigation and enforcement powers and increasing its ability to share relevant information with partners.
It will enhance the protection of personal information to protect individuals from fraud and other harms.
What happens next?
Although the Bill has received royal assent and is now an act, you do not need to do anything differently just yet. Some of the measures in the act such as identity verification, will not be introduced straight away. Many of these changes need system development and secondary legislation before they are introduced.
However, other measures will come into force in early 2024. Over time, they will lead to improved transparency and more accurate and trusted information on its registers.
To discuss these changes to UK Company Law and how it will affect you and your company, please do not hesitate to get in touch with the team at JRW Hogg & Thorburn.
