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Changes to UK company law under the Economic Crime and Corporate Transparency Act will be rolled out over the next few years. The first measures are due to take effect from 4 March 2024.
These changes will bring new responsibilities for company directors, people with significant control (PSCs), and anyone who is required to file on behalf of a company, LLP, or limited partnership.
In this article, we outline the key measures and what these reforms might mean for you.
New rules for registered office addresses
The introduction of new rules for registered office addresses is one of the most notable changes. From 4 March 2024, all companies will be required to use an ‘appropriate address’ as their registered office.
An appropriate address is one where any documents sent to the address should be expected to come to the attention of someone acting on behalf of the company and be recorded by an acknowledgement of delivery.
Many existing companies will already satisfy the new registered office requirements. However, these changes will affect those using a PO Box as a registered office address.
Any company currently using a PO Box address for such purposes will need to change their registered office by 4 March to avoid being struck off the register.
Where a company is identified as using an inappropriate address after this date, Companies House will automatically change its registered office to a default address. The company will then have 28 days to provide an appropriate address before steps are taken to strike off the company.
Other address services provided by third parties (e.g. company formation agents and accountants) will be unaffected, as long as those addresses satisfy the new rules.
Changes to the annual confirmation statement
Under the new measures, all new and existing companies will need to confirm that their intended future activities will be lawful. This statement of legal purposes will be included as part of the annual confirmation statement, as well as the application to register a company.
Additionally, all companies will need to supply a registered email address to Companies House. From 4 March, new companies must give this information during the incorporation process, whilst existing companies will be required to provide a registered email address on their next confirmation statement from 5 March onwards.
Companies House will only use the email address to communicate with the company. This information will not be made available on the public register.
New filing requirements for annual accounts
There will also be changes to the way companies file their annual accounts, with Companies House transitioning toward filing by software only. This will be phased in over the next couple of years, although the exact timetable is yet to be confirmed.
The aim of this move is to ensure more efficient and secure annual accounts filings for companies whilst improving the quality of information held on the register.
To comply with the new filing requirements, companies will need to find suitable accounting software before the removal of existing web-based and paper accounts filing methods.
Several other changes to accounts will also be introduced in the next few years:
- Small and micro-entity companies will need to file a profit and loss account
- Small companies that don’t qualify as micro entities will be required to file a directors’ report
- Filing ‘abridged’ accounts will no longer be an option
- Any company that claims an audit exemption will be required to include an additional statement by the directors on the balance sheet
- There will be a limit to the number of times a company can shorten its financial year (the ‘Annual Accounting Period’)
Further information on these measures will be released in due course, following their finalisation in secondary legislation. Companies will be given sufficient warning and guidance before the changes come into effect.
Improvements to the Companies House register
Improving the quality of data on the public register is one of the key aims of the changes to UK company law. To achieve this, Companies House will be equipped with significantly increased powers.
These will enable the registrar to take on a more active role in protecting the integrity of information on the public register, rather than simply being a passive repository of corporate data.
Companies House aims to introduce some of the following changes on 4 March. However, this date is dependent on the passing of secondary legislation.
Query and challenge corporate data
The new measures will transform the role of the Companies House. Under the Act, the registrar will have the power to query, challenge, or reject any information that appears to be incorrect or inconsistent with the information it already holds.
In some cases, Companies House will also be able to remove certain information more quickly where it is known to be inaccurate, incomplete, false, or fraudulent.
Company names
The misuse of company names will be tackled, with more comprehensive checks being carried out on names that may mislead or give a false impression to the public.
Annotations on the register
Companies House will also use annotations on the public register to clarify or highlight potential issues with information supplied by particular companies.
Data matching
Additional steps to clean up the register will be achieved by the use of data matching. This will enable the registrar to quickly identify and remove inaccurate information.
Identify verification
The introduction of a new identity verification process will also help to deter individuals from using companies for illegal purposes. The requirement to verify identity will apply to any person setting up, owning, running, or controlling a new or existing UK company or limited liability partnership (LLP).
Enforcement and sanctions
Companies House will have the power to make annotations on the register, impose financial penalties, and pursue prosecution where a company fails to respond to a formal request from the registrar to provide more information.
Removal of certain statutory company registers
Presently, companies must keep several internal company registers. However, under the new act, companies will no longer be required to maintain their own internal register of directors, register of directors’ residential addresses, register of secretaries, or PSC register.
Instead, the information normally kept in those records will be maintained on the public register at Companies House. The requirement to keep other internal registers, including the register of members, remains in place.
The act will, however, remove the option for private companies to maintain their shareholder information only on the Companies House register. They will now have to keep an internal register of members (which many companies do anyway).
No date has been provided for when these changes will be introduced. Until such time that Companies House makes the announcement, you should continue to keep all of your company registers in accordance with the current rules.
Enhanced data protection options
To ensure that sensitive data is only published when ‘necessary and proportionate to do so’, new measures will allow individuals to remove or withhold certain personal information from the public register at Companies House.
Any person who is listed on the register will be able to make an application to have their residential address, date of birth, business occupation, and signature removed from historical documents.
Additionally, where any person may be at risk or physical harm or violence as a result of their personal data being displayed on the register, they can ask Companies House to suppress their name, date of birth, and certain addresses.
No date has yet been announced for when these measures will be introduced. Secondary legislation is required before the changes can happen.
Changes to limited partnerships
The Economic Crime and Corporate Transparency Act has introduced a range of new measures to make limited partnership (LP) details more transparent and accessible. In due course, limited partnerships will need to:
- provide the name, date of birth, and home address of each partner
- verify the identity of their general partners
- maintain a UK registered office address
- provide a standard industrial classification (SIC) code
- file an annual confirmation statement with Companies House
- provide a registered email address
Unlike LPs in England & Wales and Northern Ireland, Scottish limited partnerships (SLPs) already maintain registered offices and file annual confirmation statements. However, the rest of the new requirements outlined above will also apply to them when the measures are brought into force. No date has yet been announced for when this may happen.
Get in touch
Further information on changes to UK company law and the implementation timetable of the new measures is available from GOV.UK.
Please leave a comment below if you have any questions, or get in touch with our Customer Service Team if you’d like to find out more about our Registered Office Address services in London and Glasgow.
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