ID Verification of Directors
New Directors
Individual director’s identities must be verified before they can be appointed, unless exempt (which will be relevant for only a tiny minority of directors in the interest of national security etc).
For new companies, ID verification must take place before an application for the formation of a company is delivered to Companies House (CH).
A statement of proposed officers (SoPO) delivered when applying to form a company MUST include a statement from each individual named as a director, confirming that their ID is verified (or they are exempt). For a company to be able to make this statement, ID verification via CH (see here) must have already taken place. If a verification statement is being delivered to CH, the SoPO and the ACSP verification statement can be submitted at the same time (see here as to verification via an ACSP).
Post incorporation, a director must verify their identity as soon as possible and must do so before their appointment is notified to the Registrar by a company. A notice of appointment of an individual director filed at CH must contain a statement that the individual’s ID is verified (or exempt). For a company to be able to make this statement, ID verification must have taken place before the notice is delivered to CH (verification via CH). If a verification statement is being delivered to CH, these can both be delivered at the same time (see here).
The director will open an account with CH and verify their identity. Upon receipt of the notification from the company, CH will cross check the director with a database of verified accounts. If a matching verified identity is found, CH will register the director. CH will then notify the director and the company of the successful registration. If an identity is not found, CH will reject the notification.
Existing Directors
There is still some uncertainty as to the timetable for ID verifying existing directors. The Government has stated that there will be a transition period within which existing directors must verify their identity. It is expected that directors will be provided with time to comply with the new requirements. The timetable will be set out through secondary legislation and guidance.
Corporate Directors
At present, companies can act as directors provided there is at least one natural person listed on the board. Therefore, A Ltd can appoint a corporate director provided it also has a natural person listed as a director. Whilst this has created some confusion as to who controls a company, it is seen as offering a degree of flexibility which can be useful. Therefore, the concept of corporate directors (with restrictions) will be retained.
However, to enable transparency if a UK company has a corporate director, all the corporate director’s directors must be natural persons and those natural persons must be ID verified prior to the corporate director appointment. This ensures there is only one layer. Only a UK corporate body can be appointed as a corporate director.
Non-Compliance
For both new and existing directors, failure to comply with the ID verification requirements may result in criminal sanctions or civil penalties.
If notified of a new unverified director, CH will not register them. The appointee will commit an offence if they act as a director whilst unverified. The company and its officers will also commit an offence if they allow an appointee to act whilst unverified.
For directors, failing to verify could result in being prohibited from acting as a director.
Verifying multiple roles
ID verification is a one-off exercise for individuals. It is expected that each person will have one identity verification account and all their roles in different entities will be recorded in one place. This should make it easy for searchers to take a view on the validity and authenticity of the individual with whom they are dealing.