Economic Crime & Corporate Transparency Bill – Changing Role of Companies House
The Economic Crime and Corporate Transparency Bill which aims to increase the transparency of UK corporates, is expected to become law in this Parliamentary session. A significant part of this bill is a major change to the role and function of Companies House. This will significantly impact the information companies are required to file.
Companies House has to date been largely a passive administrator of company information and because of this there has been growing concern about the accuracy of the companies register. The objective of reform is for Companies House to take on a more active role in promoting and maintaining the integrity of the register and for there to be more reliable data on companies and the people behind them. To do this, the Registrar will be given a wider array of powers to query and investigate the information supplied to it and to amend or remove information on the register.
Key points to note for SME private companies:
At present, the identity of any individual whose name is filed at Companies House does not need to be verified. New identity verification measures are therefore proposed to be introduced. Anyone setting up, running, owning or controlling a UK company (or LLP) will need to verify their identity with Companies House. This includes anyone else submitting filing information on a company’s behalf (such as a company secretary). It is anticipated that all new and existing directors, members of LLPs, Persons with Significant Control (PSCs) and directors of Relevant Legal Entities (RLEs) will be required to verify their identity. Directors, (LLP members) and PSCs who do not verify their ID will commit a criminal offence and/or incur a civil penalty. Companies that have an unverified director will also commit an offence.
Query Information, Remove & Change Information
Companies House will be given new powers to query information on the register either before it is placed on the register or post-registration. This will include the power to query erroneous, anomalous or suspicious filings (including company names) and reject them if warranted. Companies House will no longer be obliged to accept documents that are delivered if there is a reason to query the information provided. Companies House will also have the power to remove material more swiftly and in wider circumstances than is currently the case. This includes a proposed discretionary power to change the address of a company’s registered office to a default PO Box address without application, if the registrar is satisfied that the company is not authorised to use the address or there is evidence that the address does not exist.
Companies House will have extended powers to check data submitted to it against data held in other databases, such as the Passport Office. The Registrar will also be empowered to proactively inform security agencies of potential wrongdoing and share relevant data (rather than on request as now).
The proposed long-standing restriction on the use of corporate directors will finally be introduced. A company can currently have any number of corporate directors as long as one is a “natural” director. To increase transparency, a company will only be able to retain and appoint a corporate director if all the corporate director’s own directors are natural persons; those natural persons are, before the corporate director is appointed, subject to the identity verification process. All corporate directors must be UK companies or registered entities. Overseas corporate directors will not be allowed.
Transparency of company ownership
Private companies will be required to provide a one-off full shareholder list to Companies House.
Prevent abuse of personal information
Individuals will have greater rights to ask for personal information to be suppressed and hidden from public view.
Digital filing of information – Accounts
It is intended that all information will be filed digitally, this includes company accounts in iXBRL. Filing options available to small and micro companies will no longer include “abridged” and “filleted” accounts. These companies will be required to file a full balance sheet and profit and loss account. Small companies will also need to include a directors’ report (for micro entities this will be optional).