Last Updated on November 12, 2024 by admin
Companies House Reforms Planned in the UK
Companies House Reforms: To increase transparency and tackle economic crime, Companies House is undergoing significant changes, with the first set of changes coming into effect on 4th March and others expected from May 2024.
The key changes under the Economic Crime and Corporate Transparency Act (ECCTA) will improve transparency and accuracy on Companies House registers. These measures include:
- More effective enforcement powers for Companies House and increasing their ability to share relevant information with partners.
- Broadening the register’s powers to become a more active gatekeeper over company creation and more reliable data.
- Identity verification process for all new and existing registered company directors, people with significant control (PSCs), and those who file on behalf of companies.
- More reliable and accurate financial information on the register, which reflects the latest advancements in digital technology and enables better business decisions.
- Enhancing the protection of personal information to protect individuals from fraud and other harms.
These changes will affect all entities registered with Companies House, companies registered in England and Wales, Scotland, and Northern Ireland.
ECCTA reforms that came into force on 4th March include:
Increased powers for Companies House:
The registrar has increased powers to query information, reject filings, request proof, and remove information from the register related to companies.
The radical reforms will give powers to the registrar to check the information provided to Companies House is accurate.
Confirmation statement changes:
Companies must provide a registered email address for Companies House communications. According to the registrar, the email address will not be published on the public register.
Existing companies will need to provide an email address when they file for their next confirmation statement that is dated 5th March 2024 onwards while new companies will need to do so when they incorporate.
The email address will be used by Companies House to communicate with you about your company, so you must choose an appropriate email address. It is possible to register the same email address for more than one company. You can change your registered email address through the ‘update a registered email address’ service.
Need help filing your company’s annual confirmation statement? We’re here to help; we offer affordable, quick, and accurate confirmation statement filing services. Now that Companies House is increasing their filing fee from £13 to £34, you can file as early as now to save money. If you have missing documents or codes from Companies House we will even help you to get them for free at no additional cost.
Rigorous checks on company names:
There will be rigorous scrutiny of company names. This is to prevent inappropriate or misleading names from being registered.
New rules for registered office addresses:
Companies will need to ensure that it registers an ‘appropriate address’. 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 or any documents sent to that address can be recorded by an acknowledgment of delivery. One may use a third-party agent’s address if they meet the conditions for an appropriate address.
This means, PO Boxes are not permitted. If you currently use a PO Box as your registered office address, you’ll need to change it using your company’s authentication code.
In the event of default, Companies House will take action by changing the address to default, and the company affected will have 28 days to provide an appropriate address with evidence of proprietor ownership. If the company fails to provide the evidence within 28 days, Companies House will start the process to strike it off the register. These rules will enhance transparency and curb address fraud.
The new rules accept both physical and virtual addresses. We offer virtual office services that allow you to use any of our addresses for your business without actually being located there. The UK virtual office address caters to the requirements of all types of UK and non UK businesses. We have a range of virtual business address locations to choose from located in Central London, East London, and Essex. All of our London virtual office packages come with mail handling.
New lawful purpose statements:
Companies will be required to provide lawful purpose statements to ensure that they intend to operate within legal bounds. The confirmation will be done annually on the confirmation statement.
These new statements intend to make it clear that all companies on the register, new and existing, must operate lawfully.
Sharing data with other entities:
To ensure compliance with regulations, Companies House will share relevant data with other government departments and law enforcement agencies. This change of information aims to combat fraud, protect personal information, and transparency.
Clean up the register:
Companies House is taking steps to clean up the register, using data matching to identify and remove inaccurate information
Annotate the register:
Companies House now has the authority to annotate the register when information appears confusing or misleading.
Changes expected to take force from May 2024 include;
Changes to Companies House fees:
From 1st May, Companies House will be increasing fees to take new future expenditures into account, as well as making sure costs are recovered from existing expenditures. New fees will apply to all the submissions made after this date.
Companies House fees are set on a cost-recovery basis. This means their fees must cover the cost of the services they deliver since they do not make a profit from their fees.
Registrar’s powers to impose civil financial penalties:
The Registrar of Companies will be empowered to impose a financial penalty of up to £10,000 as an alternative to criminal sanctions. This measure aims to enhance accountability and encourage compliance with reporting obligations. Civil penalties for most offenses under CA 2006.
Other significant changes still to come include:
Identity verification:
Anyone running, owning, controlling or setting up a company in the UK will need to verify their identity. All directors and people with significant control (PSCs) will need to complete identity verification for new companies.
For existing companies, all directors (or equivalent) and PSCs will have a transition period to verify their identity with Companies House.
Anyone acting on behalf of a company will also need to verify their identity before they can file information with us. Identity verification will also apply to other registration types like the limited liability partnership (LLP).
Changes to accounts:
Companies House will transition towards filing accounts by software only. This will improve transparency by making more financial information available to the public.
The new legislation lays the foundation for Companies House to require companies to file accounts in a digital format. To comply with these changes, all companies will need to find suitable software before web-based and paper filing options are no longer available.
This applies to directors who file accounts themselves, and companies who use third-party agents or accountants to file their annual accounts. The move to filing accounts by software only will be phased in over the next 2 to 3 years.
Changes to a limited partnership:
Limited partnerships will need to file their information through authorised agents also known as an Authorised Corporate Service Provider and they’ll need to file more information with Companies House.
When the measures come into force, LPs must provide partners’ names, dates of birth, and usual residential addresses. They must also verify the identity of general partners and provide a registered office within the UK. Further, they must provide a standard industrial classification (SIC) code and file an annual confirmation statement.
Application to protect information:
Individuals will be able to apply to suppress personal information from historical documents and to have personal information protected from public view because of the risk of harm.
This is to balance the need for corporate transparency with the understanding that personal information should only be published when it’s necessary and proportionate to do so.
Transparency of company ownership:
When the measures come into force, companies must record the full names of shareholders who are individuals or the full names of corporate members and firms in their registers. Additionally, they must provide a one-off full shareholder list so Companies House can display shareholder information in a more user-friendly way.
Companies House will also collect and display more information from companies claiming an exemption from providing persons with significant control (PSC) details, including the reason for the exemption and the conditions that allow a relevant legal entity (RLE) to be recorded as a PSC.
There will also be restrictions on the use of corporate directors. Only UK corporate entities with ‘legal personality’ can be appointed corporate directors. These corporate directors must be natural persons and must verify their identity.
Who is affected by the changes?
The new legislation applies to all new and existing company directors, people with significant control of a company (PSCs), and anyone who files on behalf of a company.
All entities registered with Companies House have also been affected by the new legislation, including private limited companies, public limited companies (PLCs), limited liability partnerships (LLPs), limited partnerships (LPs), community interest companies (CICs), and overseas companies.
The legislation also applies to companies and other entities registered in England and Wales, Scotland, and Northern Ireland.
Anyone who files on behalf of clients, such as accountants and company formation agents will also be affected. You’ll need to register as an authorised agent (also known as Authorised Corporate Service Providers (ACSPs) with Companies House.
The phased rollout of these new regulations aims to tackle economic crime, support economic growth, and make sure the UK is one of the best places in the world to start and grow a business. UK company services and office rentals are our specialty, whether starting a new business or simply looking to restructure your existing one. Feel free to get in touch, and we can discuss how our flexible solutions can cater to your specific needs and help you achieve your business goals efficiently.
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