Transparency Requirements of Company Formation
The Economic Crime and Corporate Transparency Act 2023 (ECCTA) amends the Companies Act 2006 to introduce additional transparency requirements when incorporating a company. Most of these provisions came into force on 4th March 2024.
Therefore, the procedure to incorporate a company has changed as follows:
- Statement of lawful purpose – the memorandum of association must state that the subscribers wish to form the company for a lawful purpose.
- Full names to be included – the memorandum of association must include the full forename and surname of each subscriber.
- Subscriber disqualification – subscribers must make a statement that none of them are disqualified under the director disqualification legislation.
- ID verification of proposed directors – proposed officers will need to be ID verified to act and the statement of proposed officers includes a confirmation that directors’ identities are verified. The ECCTA also includes an option to provide ID verification information about PSC’s on incorporation. This provision is not yet in force.
- Director disqualification/PSC disqualification – no director nor PSC may act if they are disqualified under the directors’ disqualification legislation. Both the statement of proposed officers and statement of initial significant control must confirm this to be the case.
- Registered email address – the registration documents must contain a statement of the intended registered email address of the company, which must be an appropriate email address.
- Registered office address - the registration documents must contain a statement of the intended registered office address of the company, which must be an appropriate address.
The ECCTA is being implemented in phases across 2024 (and possibly 2025). Some of the changes will need system development and secondary legislation before they're introduced. This in particular applies to ID verification measures.