14 April 2023
Jack Bull, Trainee Solicitor
Corporate filing obligations are set to become even more onerous under the Economic Crime and Corporate Transparency Bill. In order to tackle economic crime in the UK, the Bill will significantly reform Companies House (among other things). This change in corporate compliance is directly applicable for most of our commercial clients, being private limited companies or LLPs.
The Bill follows last year’s Economic Crime Act, which addressed immediate concerns about sanctions busting related to the Russia-Ukraine War by introducing a register of otherwise anonymous foreign owners of UK property. The new Bill targets economic crime far more broadly.
The scope of reform to Companies House is significant:
- Identity verification. The Bill will introduce identity verification requirements for company directors, PSCs and anyone filing documents at Companies House on their behalf. Entities will be able to file information with Companies House directly or by way of an authorised provider. The precise requirements of this remain unclear and are to be determined by the Secretary of State. Failure to verify one’s identity when required may lead to an offence.
- Shareholder and subscriber details. Companies will need to record the full names of their shareholders and subscribers under the Bill. Providing only initials in the case of their forenames is currently permitted, allowing a degree of opaqueness as to the ownership of some companies.
- Financial information. The Bill will expand financial filing obligations for small companies by way of removing various current exemptions. These include (1) requiring micro-entities to file balance sheets and profit and loss accounts, (2) requiring small companies that are not micro-entities to file annual accounts and directors reports and (3) no longer permitting small companies to file abridged accounts. Beyond preventing crime, these changes also aim to give creditors a clearer picture of the financial position of small companies in potential transactions.
- Enhanced role of the Registrar. Companies House will gain new powers aimed at improving the accuracy and integrity of filed information under the Bill. These will enable them to (1) reject filings that are inconsistent with previous ones, (2) notify companies of inconsistencies they must resolve, (3) remove inaccurate material from the record and (4) demand additional information to determine whether any document complies with their requirements. Accordingly, companies will need to be more diligent with Companies House filings in future.
These new transparency obligations and increased powers of Companies House will have a big impact on corporate compliance for limited companies. The rules are in addition to existing corporate reporting obligations, which many companies already find onerous and struggle to comply with without professional support.
Jack is a Trainee Solicitor in our Whiteladies Road office. To discuss how our corporate team can help with your company’s corporate compliance obligations, please contact us on 0117 9733 989 or by email to email@example.com