Updates have been provided regarding the implementation of the Economic Crime and Corporate Transparency Act 2023 (“ECCTA”) by the Economic Crime and Corporate Transparency Act 2023 (Commencement No. 2 and Transition Provision) Regulations 2024 (“Regulations”) on 4 March. The ECCTA is designed to tackle economic crime and make developments to Companies House and its systems. Details of the provisions which the Regulations bring into force and the impact this will have on businesses and the information they have at Companies House is outlined below.

IN EFFECT NOW

Lawful Purpose

The Regulations bring into force the ECCTA requirement that to incorporate a company from 5 March 2024, the subscribers must provide a statement confirming that the purpose of the company is lawful.

All companies will need to confirm in their annual confirmation statement that the intended future activities of the company are lawful.

REGISTERED OFFICE

The Regulations enforce the requirement that Companies will need to ensure that their registered office is an “appropriate address”. An address will be considered appropriate if it can be received by a person acting on behalf of the company and acknowledgement of delivery can be obtained. This means PO boxes are no longer accepted.

An additional power provides the registrar of Companies House with the ability to change the registered address by their own initiative where they consider the current address of a company to be inappropriate.

REGISTERED EMAIL ADDRESS

From 4 March 2024, new companies will need to provide an appropriate email address at Companies House. Existing companies will need to provide a registered email address when they file their next confirmation statement.

The email address is considered appropriate if, in the ordinary course of events, emails sent to it by the Companies House would be expected to come to the attention of a person acting on behalf of the company. Such email address will not be available for public inspection.

COMPANY NAMES

The Regulations brought into force additional restrictions on company name. A name for a company may be prohibited if the proposed name:

• could constitute an offence of dishonesty or deception;
• suggests a connection with a foreign government or international body such as the United Nations or NATO;
• is a computer code;
• is one a company has been ordered to change;
• gives a misleading indication of its activities; or,
• is intended to be used for criminal purposes.

Enhanced powers provide the registrar of Companies House with the ability to determine a new name for the company and to remove references to the old name if it contains computer code.

TO COME INTO EFFECT

IDENTITY VERIFICATION

Directors, People with Significant Control and those who submit documents to Companies House on behalf of companies, will need to have their identities verified directly with Companies House. The documents to be verified will include a photograph of the person and their identity documents. Verification methods will include biometric authentication and checks undertaken by authorised corporate service providers.

On incorporation the statement of any proposed officer must, in the case of each individual named as a director, confirm that the individual’s identity is verified. Directors will be prohibited from acting until their identity has been verified and any failure to provide identity documents could result in fines and criminal penalties.

A company will only be able to have a corporate director if the directors of such corporate entity are individuals who have had their identity verified. 

There is expected to be a transition period to provide existing companies and other registrable entities a set amount of time to comply with the new requirements.

PERSONAL INFORMATION

Individuals who have personal information displayed on Companies House can request to have it suppressed from public disclosure. Personal information includes occupations, dates of birth, signatures and residential addresses. This also includes names and all other sensitive information in cases where an individual is at serious risk of intimidation or violence. Information contained in verification statements will remain private.

Persons of Significant Control (PSC)

There is no longer the obligation for a company to maintain its own PSC register, or to elect to hold PSC information on the central register at Companies House. All relevant information relating to a company's PSCs will only be held on the public register at Companies House.

COMPANY ACCOUNTS

The ECCTA introduced new filing requirements to require small companies to file annual accounts (profit and loss account and a balance sheet) and a directors’ report. Meanwhile, micro-entities will only have to file a profit and loss account.

Companies will no longer be able to file abridged accounts and if they claim an audit exemption, they must submit an eligibility statement.

WHAT’S NEXT

Further details and guidance are expected to be published in secondary legislation and by Companies House regarding items still needing implementation.

For the above items which have come into force, it is important that businesses comply with the new laws as non-compliance may result in civil or criminal sanctions.