Changes at Companies House: corporate transparency and companies register reform
The Government is planning the most significant changes to the role and powers of Companies House since the register was first created in 1844.
The proposed changes are part of a package of reforms to increase corporate transparency, improve business transactions and tackle economic crime which the Government has been consulting on since 2019.
What's been proposed?
Over the last couple of years, there have been several Government consultations (see Further information below) on the proposed changes. Key proposals include:
- Identity verification: introducing compulsory identity verification for all directors, People with Significant Control and those filing information on behalf of a company. The Government has proposed that once identity verification has been introduced, all company directors will have to verify their identity with Companies House before they can incorporate and a director's appointment will not have legal effect until their identity has been verified.
- Reforms to Companies House powers: Companies House will have stronger powers to query, seek evidence for, amend or remove information and to share it with law enforcement partners when certain conditions are met. Currently, Companies House is required to accept documents which are filed in good faith and place them on the register. One of the most important changes is to give Companies House the power to query information being filed and ask for evidence to support this, where appropriate. The Government issued a further consultation about how this power would work in practice which closed in February.
- Register of Directors: it is proposed to remove the requirement for companies to keep their own Register of Directors so that the register held by Companies House will become the single, verified source of information for this. The Government is also considering the position on some of the other registers, such as the Register of Secretaries and the Register of People with Significant Control (although it has said it is unlikely to remove the requirement to keep a Register of Members).
- Protecting personal information: this includes improving the processes for removing personal information from the register, including people's signatures, the day of date of birth and residential addresses.
- Company accounts: the Government has consulted on how to improve the way financial information is filed with Companies House. This includes requiring accounts to be delivered digitally and to be fully tagged. It is also proposed that the timescales for filing accounts will be shortened.
- Ban on corporate directors: the Government legislated in 2015 to ban the use of corporate directors but these provisions were never brought into force. The Government now proposes to implement the ban, but with a 'principles' based exemption. This would mean that a company will only be able to appoint a corporate director if all the corporate director's directors are natural persons whose identities have been verified by Companies House.
Who will the proposals apply to?
It is intended that any entities that are subject to the transparency provisions of the Companies Act 2006 will be caught (including registered companies, LLPs and limited partnerships).
As these proposals are so wide-ranging and many will require legislation to implement, the Government has said it intends to publish a comprehensive set of proposals and will proceed to legislate 'when Parliamentary time allows'. Funding will be required, particularly to implement the major changes to Companies House. However, the Government has indicated that it is committed to reform and we are likely to see at least some of the changes in the next few years.
The Government's response to the consultation on corporate transparency and register reform can be found here.
You can also see the links below for the relevant Government consultations (which are now closed):
- implementing the ban on corporate directors
- improving the quality and value of financial information on the UK companies register
- powers of the registrar
Current Companies House filing deadlines
The automatic extensions granted by the Corporate Insolvency and Governance Act have now come to an end for filing deadlines that fall after 5 April 2021. The Government had previously extended some deadlines to relieve the burden on businesses during the coronavirus outbreak.
As a reminder, some of the key Companies House filing deadlines are below:
- First Annual Accounts: 21 months after the date the company is registered with Companies House;
- Annual Accounts: 9 months after the company’s financial year ends;
- Confirmation Statement: dated a year after either the date the company was incorporated or the date you filed your last confirmation statement. You have 14 days from the date of the confirmation statement to file it with Companies House;
- Charges: within 21 days from when the charge is created;
- Resolutions: all special resolutions and certain ordinary resolutions must be filed at Companies House within 15 days of being passed;
- Changes to directors and company secretaries, for example new appointments, resignations or changes to their personal details: within 14 days of the change;
- Changes to the ‘people with significant control’ (PSC) register, or a PSC's personal details like a new address: within 14 days of the change; and
- Allotment of shares: within 30 days of issuance.
If you would like to discuss these proposals or the potential impacts the changes will have on your company, please get in touch with Ayda Habboush or your normal Trowers contact.