The Economic Crime and Corporate Transparency Bill – a short summary of key reforms for companies
The Economic Crime and Corporate Transparency Bill (Bill) will bring significant reforms to Companies House once it receives Royal Assent (expected Spring 2023).
The Bill has an overall aim of introducing greater transparency, improving the reliability of information on the company register and providing stronger powers to tackle illicit corporate activity, including money laundering.
This article considers the key anticipated reforms to Companies House that will impact the operation of private companies.
ID verification for directors and beneficial owners
The reforms include identity verification requirements for all new and existing registered company directors and beneficial owners and those who file information at Companies House. The verification process is to be clarified through future regulation. It is anticipated that verification may be direct with Companies House or through an Authorised Corporate Service Provider. The Bill requires such regulation to provide for criminal offences for non-compliance. Comments on the Bill during its legislative process recognise the need for this verification process to be easy, efficient and not to create a burden for businesses.
The reforms also require that an individual delivering documents to Companies House has their identity verified, which includes an authorised corporate service provider.
Greater powers for Companies House
The reforms grant Companies House improved powers, intended to promote the integrity of the public register and strengthening the UK's business environment. Such powers include the ability for Companies House to reject documents for inconsistencies, require additional information and require businesses to report discrepancies. Some of these powers also allow regulation to provide for criminal offences for non-compliance.
Additional information to be provided
The reforms also require all companies to provide (and maintain) an email address of someone acting on behalf of the company for correspondence and administrative matters with Companies House (which will not be made publicly available). It is expected that there will be a transitional period, where existing companies must provide an appropriate email address (likely in a statement submitted alongside their first confirmation statement after the requirements come into effect). Failure to do so will become an offence. The above reform is likely to mean communications with a company will become quicker.
Annual confirmation statement
In addition to the requirement to provide an email address to Companies House and verification confirmations (see above), the reforms require companies to provide a full list of its members when its first confirmation statement is filed after the new requirements come into effect, increasing the transparency of member ownership and information. To ensure the information being provided is correct, there is an additional requirement that a company's register of members contains the full name of a member.
The reforms provide that incorporating a company will require additional information which includes: (i) a statement from a registrable person, or a registrable relevant legal entity that such person is not disqualified under the directors disqualification legislation; (ii) a statement from its subscribers that they wish to form the company for lawful purposes; and (iii) confirming that each individual named as a director has had their identity verified.
We are monitoring the passage of the Bill through Parliament and aim to keep you updated. If you have any questions about how this will impact your business then please get in touch.