On Thursday 26 October 2023 the Economic Crime and Corporate Transparency Act achieved Royal Assent. This marks a significant shift in the continued effort to prevent abuse of the Companies House register as well supporting the growth of businesses operating in the United Kingdom. The Act strengthens the powers of the Registrar of Companies (Companies House) - a summary of the key measures can be found below:
- Enhanced powers to improve the quality and reliability of data stored at Companies House.
- Enhanced measures to act in instances where a person’s personal information has been used on the register without their consent.
- New identity verification measures (see further below).
- Wider administrative powers in relation to the creation of companies.
- Improved enforcement powers.
- Enhanced personal protection measures against fraud.
The changes to be implemented under the Act centre around a series of objectives which include ensuring that company documents are delivered to the Registrar where required and that the information contained in the register is correct and up to date. Similarly, there will be revised attempts to ensure that records do not provide a misleading impression of a company to the public as well as revitalised efforts to ensure that those wishing to carry out unlawful activities through registering and operating companies are unable to do so.
With the exception of the improvements to identity verification (to be implemented immediately), the remainder of the revised measures are expected to come into force in early 2024.
New identity verification measures
The new identity verification measures are designed to make it harder for companies to register fictitious directors. Existing directors, persons with significant control (PSCs) and those delivering documents to the Registrar on behalf of a company must all be verified.
At present, a transitional period applies, giving existing directors, PSCs and those providing corporate services on behalf of a company an opportunity to comply. Verification will be available in two forms, directly via Companies House or through an Authorised Corporate Service Provider. An individual wishing to verify their identify via Companies House will be required to take a photograph of their face alongside an identifying document (passport or driving license).
It is expected that the identity verification will be a one-off requirement, meaning that once an individual has achieved ‘verified status’ they would not need to re-apply for verification in the future. However, Companies House will maintain discretion in this regard and may order that an individual obtain re-verification when considered appropriate.
Failure to comply will be subject to significant potential penalties, including criminal proceedings (with a level 5 fine), civil penalties issued by the Registrar, being unable to file documents and potential disqualification from acting as a director.
Regarding the enforcement of identity verification checks, Companies House does not at present offer any guidance on how these are going to be enforced at present. Companies House has indicated that these measures will require new secondary legislation and guidance, as well as system development. We will keep you informed of any developments and updates to the Act and its implementation.