Changes to UK Company Law Update

June 9, 2024

By: tme

Ai Law Legal Services

UK Company Law is changing. The Economic Crime and Corporate Transparency Act will introduce a number of changes over the next few years. The purpose of these changes is to improve transparency and accountability surrounding UK registered company’s and Limited Partnerships.

This page summarises the new measures.

Improvements to quality of data on Companies House

The law will introduce greater powers for Companies House to query information, stronger checks on company names, new rules for registered office addresses, and new lawful purpose statements to ensure the data held and publicly available is correct and up to date. Ways in which this is to be achieved includes:

Registered office addresses

All companies must now have an ‘appropriate address’ as their registered office, not just a PO Box.

An address is an ‘appropriate address’ if, in the ordinary course of events:

  • a document addressed to the company, and delivered there by hand or by post, would be expected to come to the attention of a person acting on behalf of the company; and
  • the delivery of documents there is capable of being recorded by the obtaining of an acknowledgement of delivery

Where the registrar does not view a company’s registered office as appropriate, they can change it to a default address, held at Companies House. If a company’s registered office is moved to the default address, they must provide an appropriate address with evidence of proprietary ownership within 28 days, or the company could be liable to be struck off the register.

Statement of lawful purpose

The subscribers to a company must now confirm they’re forming the company for a lawful purpose and confirm this each year as part of their confirmation statement. This gives the registrar greater enforcement powers in the event that a company is found to be acting unlawfully.

Verifying your identity directly with Companies House

Companies House intend to put in place a service to verify your identity using ID documents, such as a passport.

Currently, Companies House authorised agents, also known as Authorised Corporate Service Providers (ACSPs), are individuals or organisations that undertake anti-money laundering (AML) supervised activity, such as:

  • company formation agents
  • solicitors
  • accountants

Authorised agents already have a duty to carry out due diligence checks on all their clients. The Companies House identity verification process will build on these existing checks.

Anyone setting up, running, owning or controlling a company in the UK will need to verify their identity.

Individuals will be able to apply to suppress personal information from historical documents, and apply to have personal information protected from public view because of risk of harm.

Improving Transparency on Company Ownership

Identity Checks on Shareholders and Directors

New requirements to provide additional shareholder information, and restrictions on the use of corporate directors.

Under measures introduced by the Economic Crime and Corporate Transparency Act, company ownership will be more transparent.

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
  • provide a one-off full shareholder list so Companies House can display shareholder information in a more user-friendly way

Companies House will:

  • collect and display more information from companies claiming an exemption from providing person with significant control (PSC) details, including the reason for the exemption
  • collect and display the conditions which 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 as corporate directors and the directors of these corporate directors must be natural persons who have verified their indentity.

Increased Transparency Filing Changes to Limited Partnership

Limited partnerships will need to file their information through authorised agents, and they’ll need to file more information with Companies House.

When the measures come into force, LPs must:

  • provide partners’ names, date of birth and usual residential address
  • verify the identity of general partners
  • provide a registered office within the UK
  • provide a standard industrial classification (SIC) code
  • file an annual confirmation statement

Changes to Confirmation Statement Annual Filing Information

From 4 March 2024, there are new requirements to provide a registered email address and to confirm that the intended future activities of the company will be lawful.

More enforcement and sanction powers introduced

Sanctions for failure to respond to requests by Companies House could include:

  • a financial penalty
  • an annotation on the company’s record
  • prosecution

More effective investigation and enforcement powers for Companies House, and new powers to share data with law enforcement agencies and other government departments.

Company House Fees

From 1 May 2024, increased fees to take new future expenditure into account, as well as making sure costs are recovered from existing expenditure.

Changes to Accounts Filing

There is transitioning towards filing accounts by software only, and changes to small company accounts filing options.

Small and micro-entity companies will now need to file their profit and loss accounts and file a directors’ report. They will no longer be able to file ‘abridged’ accounts, meaning the information publicly available on UK Companies will be more in detail and transparent.

Summary

These changes are designed to increase transparency and accountability for UK Companies.

These changes are introduced at a time when geopolitical conflict and world politics are becoming more strained and the government looks to tackle the flow of illicit monies from high risk areas and sanctioned countries.

UK Company Law has often been a target of criticism for its light-touch regulation and ability for individuals to hide behind the corporate veil to conduct business in the UK, particularly to support investment into the UK property market. The changes make it difficult for overseas nationals and individuals to hide their identities and tries to ensure that the Ultimate Beneficial Owner is recorded at Companies House.

The legislation gives the registrar more teeth in terms of enforcement for failure to comply with UK Company law and rules on filing at Companies House. Time will show what appetite there will be for the registrar to use its powers of enforcement against UK Companies and company owners.

At Ai Law we advise on all areas of company law, compliance and enforcement action taken. If you would like to speak to somebody today, please contact us here.

Source: https://changestoukcompanylaw.campaign.gov.uk/changes-at-a-glance/

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