Companies House Reform: Economic Crime and Corporate Transparency Act – Companies House’s Transition Plan
What’s it all about?
The Economic Crime and Corporate Transparency Act 2023 (the ECCTA) was brought in to law by the previous government to improve transparency over UK companies. These reforms will make the biggest changes to Companies House since corporate registrations were established in 1844 and will be funded by higher incorporation and annual fees for companies and other registered entities (which were brought in in May 2024).
The ECCTA’s primary objectives are as follows:
- To ensure persons required to deliver documents to Companies House do so.
- To ensure the accuracy and completeness of the information in the register.
- To ensure that the records kept by the registrar do not create a false or misleading impression to members of the public.
- To prevent companies and others from carrying out unlawful activities.
Companies House reforms
On 16 October 2024, Companies House published its transition plan for implementing the remaining provisions of the ECCTA. This will be the next phase of changes following on from those introduced in March 2024 and delayed by the change in Government, under which Companies House’s pre-existing activities to analyse and share data with law enforcement agencies were enhanced. However, not all delay is bureaucratic, as we understand that technology at Companies House has been brought up to date in the interests of ensuring a transition that champions security.
The ECCTA aims to bolster Companies House’s powers to prevent economic crime and the abuse of UK corporate structures. The powers will improve the reliability of the information it stores and enhance transparency around UK companies. The new changes going forward will grant new powers to ensure that Companies House data is “clean”.
The transition plan for the next two years will affect all new and existing directors and persons with significant control (PSCs), as well as anyone filing on a company’s behalf.
This table outlines the proposed timeline for implementing the next set of changes:
| By Autumn 2024 | Companies House will be able to issue financial penalties for any relevant offences under ECCTA and the Companies Act 2006. | |
| By Winter 2024 into 2025 | Where a company has been formed for a false basis, Companies House will be able to expedite its striking off and otherwise annotate the register in a wider range of circumstances (e.g. where a director is disqualified but the company fails to notify the registrar of their termination). | |
| By Spring 2025 | Companies House will be able to:
· carry out checks on authorised corporate service providers (ACSP’s) to authorise them to carry out identity verification (IDV) services; · allow individuals to complete voluntarily IDV; and · receive and assess applications from individuals seeking to have residential addresses suppressed from public disclosure. |
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| By Summer 2025 | Companies House will allow access on request to certain trust information on the Register of Overseas Entities. | |
| By Autumn 2025 | Companies House will make IDV compulsory on incorporation for new directors and new PSCs (people or entitles holding more than 25% of the shares or voting rights in a company, or who otherwise exercise significant control over a company).
Thee will be a 12-month transition period to require IDV for existing directors and PSCs. This will need to be filed with the next confirmation statement. |
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| By Spring 2026 | Companies House will require IDV for presenters filing any document and third-party agents will need to be registered as ACSPs to file on behalf of a company. Companies House will also be able to reject documents that are filed by a disqualified director on their own behalf. | |
| By the end of 2026 | Companies House will:
· introduce additional filing requirements for limited partnerships to provide greater transparency; · complete the transition period for requiring IDV; and · start compliance activity against those who have failed to complete IDV where required to do so. |
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One of the key changes implemented by the ECCTA is the requirement that directors and PSCs must verify their identity within fourteen days of becoming a director or PSC. The consequences of a director or PSC failing to verify identity within the time limit could be severe, including rejection of the filing, criminal proceedings (resulting in unlimited fines) and prohibition from acting as a director in the future. Further incentive to ensure compliance with the new IDV requirements comes in the form of financial penalties for the company and its officers, widening the scope for potential liability. It’s more crucial than ever that appropriate planning is in place to secure valid and lawful new director appointments.
