The Economic Crime and Corporate Transparency Act 2023 became law in late 2023. This legislation makes several important UK company law changes and gives Companies House a big shake-up, providing it with substantial new powers to fight corruption, money laundering and fraud. The provisions of the Act will be introduced in stages, and the first of these changes came into force on 4 March 2024.
Registered companies, limited liability partnerships (LLPs) and limited partnerships (LPs) in the UK are all impacted by the new legislation. This month, we explain some of the key changes that were introduced on 4 March 2024 and what it means for business owners.
Registered Office Address
All companies and LLPs must now have a registered office address at an ‘appropriate address’. This means an address to which any documents sent will come to the attention of a person acting on behalf of the company and at which receipt of correspondence can be acknowledged and recorded.
A third-party agent’s address remains acceptable if they meet the above conditions for an appropriate address. However, it is no longer possible to use a P.O. box as a registered address.
Companies House has warned that they will take action against companies that do not have an appropriate registered office address. This may include changing inappropriate registered office addresses to a default address or even commencing strike-off proceedings in the event of non-compliance.
Registered Email Address
Another introduction has been the requirement that all companies have a registered email address. New companies must now supply a registered email address when they incorporate and existing companies will need to provide a registered email address when filing their next confirmation statement. It is acceptable to use the same email address for different companies.
The obligation to maintain an appropriate registered email address works similarly to the obligation of companies to have a registered office address. So, an email address is ‘appropriate’ if emails sent to it from Companies House would ordinarily be expected to come to the attention of a person acting on behalf of the company.
This email address is required as a means for Companies House to communicate with companies and will not go on the public register.
Statement of Lawful Purpose
Upon incorporation, shareholders of new companies must confirm that they are forming the company for a lawful purpose. Existing companies will need to make their lawful purpose statement when filing their next confirmation statement and going forward, will have to repeat this confirmation in each confirmation statement thereafter.
Stronger Checks on Company Names
Companies House now has wider powers to prohibit company names (both existing and proposed) that are intended to facilitate criminal conduct, which suggest a connection with a foreign government, or which contain computer code. The secretary of state has the power to change a name that contravenes these restrictions.
Where a company name gives a false or misleading impression to the public, there are now stronger checks. Previously, a person could only challenge the registered name of a UK company if its use in the UK would be likely to mislead members of the public in the UK. This will be extended to allow a person to challenge the name of a UK company if its use anywhere in the world would be likely to mislead members of the public anywhere in the world.
Enhanced Powers for Companies House
Companies House will have more robust powers to:
- scrutinise and challenge any information that seems to be false or inconsistent
- remove inaccurate, incomplete, false or fraudulent information more swiftly
- annotate the register to alert users about potential issues with the information and
- clean up the register, utilising data matching to find and remove inaccurate information.
Furthermore, where a company does not respond to Companies House’s formal request for more information, consequences could include a financial penalty, annotation on the company’s record or prosecution.
Are Further Changes Expected?
Further changes are expected later this year. These include:
- increased fees for incorporation and registration from 1 May 2024. A full list of new Companies House fees can be found here.
- An identity verification process for new and existing directors, people with significant control and any other individuals acting on behalf of a company to complete before incorporation or filing.
- transition towards software-only filing to modernise the filing of company accounts.
There are a significant number of changes within the legislation and as the commencement dates of further reforms are announced, we will publish further briefings to ensure that you are aware of your obligations.
How We Can Help
These reforms signify Companies House’s commitment to preventing illegal activity and improving transparency. By making sure you are familiar with these reforms, you can ensure a smooth transition for your company and avoid possible complications.
We are well-equipped to help you ensure that you are compliant with these updates. If you have any questions about the new legislation and the measures that have been introduced, contact our team of specialist corporate lawyers via email.
