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Communications regarding Economic Crime & Corporate Transparency Bill

April 2023

The Economic Crime and Corporate Transparency Bill 2022 (ECCT) is likely to receive Royal Assent in spring 2023. Given the widespread nature and significance of the Bill, it will need secondary legislation and require operational changes to Companies House (CH) systems before it comes into force. However, for small private companies there are many important changes coming that you should be aware of and actively prepare for now, including communicating these changes to relevant stakeholders. These changes include:

  • an identity verification regime,
  • changes to the type of accounts filed for small companies and micro-entities,
  • changes to CH filings and the keeping of company registers and records, and
  • enhanced powers for CH to check, remove and reject information.

The identity verification regime is one of the key changes being introduced by the ECCT. It is also likely to be one of the first changes to require immediate action by all SME companies. 

The following people will have to prove they are who they say they are by verifying their identity:

  • existing directors,
  • new directors,
  • existing people with significant control (PSCs),
  • new PSCs, and
  • those who deliver documents to the Registrar at CH.

It will no longer be possible for example, to register an appointment of a director at CH nor for that director to act, until they have been ID verified.

Identity verification will ensure that there is always a verified natural person associated with an incorporation or a filing. Each director, PSC and those presenting information on the register will have an account that includes a verified identity and links their appointment in one place. Where an individual has more than one role or is registered with multiple companies as a director or a PSC, all that information will be contained in one place on the register.

Registration will require a legitimate identity document to be provided and matched to the individual. There will be different rules for new and existing directors and PSCs as well as corporate directors.

Considering this, it is important that companies start the process of deciding how the identity of their directors and PSCs will be verified and by whom and communicating this to all relevant parties so that they are aware of both the new rules and the process that will need to be followed. 

We have therefore produced template letters that companies may wish to send to their directors and PSCs regarding the new identity verification regime. These letters set out in broad terms what the new regime is and aim to communicate with the recipient that changes are coming and the need to be aware of them.

Also included is a new template letter to shareholders asking for their full names. The ECCT will also introduce a requirement for the full names of shareholders to be listed in company registers. At present under the Companies Act 2006, there is no requirement for it to be a shareholder’s full name, it could be an abbreviated name or an initial. However, as private companies will need to provide a full list of their shareholders in their first confirmation statement following the ECCT coming into force, it is worth being prepared now and having this information ready to hand for when it is needed. Our template letter is accompanied by a pro forma reply slip to allow shareholders to either confirm their details or update the company as to their full name.

These new templates will be of interest to all company directors, secretaries, and administrators.

The contents of this Newsletter are for reference purposes only and do not constitute legal advice. Independent legal advice should be sought in relation to any specific legal matter.

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