Companies House changes – looking ahead to 2024

This update note deals with the upcoming changes to Companies Houses’ processes, particularly in light of the introduction of the Economic Crime and Corporate Transparency Act 2023, which aims to improve transparency, security and fairness in the business arena. The Act succeeds the Economic Crime (Transparency and Enforcement) Act 2022, which was fast-tracked through Parliament to tackle illicit wealth in the UK property market.

The upcoming changes suggest that Companies House is committed to addressing areas in which improvements have been suggested, with Chief Executive and Registrar of Companies, Louise Smyth stating that she hopes that the changes will result in “real improvements for the UK economy, for businesses, and for individuals”.

What are the changes?

In October 2023, the Economic Crime and Corporate Transparency bill gained royal assent and became an act [1]. The Act amends the Companies Act 2006, introducing new requirements that companies registered in England and Wales must comply with when submitting information to Companies House. 

It is expected that some of the changes will be introduced from March 2024. At present, we understand these will include:

1. Greater powers to review, scrutinise and remove incorrect or inconsistent information filed with Companies House. 
2. Enhanced powers to review and check company names. 
3. Stricter rules on registered office addresses. At present, companies may use PO Box’s, however this option will be removed. As of March 2024, companies must always have an ‘appropriate’ office address. 
4. A requirement for companies to supply a registered email address.
5. A requirement for companies to confirm that they are forming a company for lawful purposes on incorporation. This is a recurring requirement as it will place an obligation on the company to annually confirm that all its future activities will be lawful via its confirmation statement.
6. Companies House will be provided with a facility to annotate the register in instances where issues with the consistency or accuracy information have been identified.
7. Companies House will also take steps to refresh existing registers by removing inaccurate information through identity matching systems.
8. Companies House will be provided with additional data sharing facilities, allowing for better working cohesion between other government departments and law enforcement agencies. 

In addition to the changes listed above, the Act will abolish the burdensome duty for companies to maintain registers of its directors and their addresses, its secretaries and its PSC register internally. Companies will instead simply file these details directly with Companies House and these will be maintained on a central public record. 

Enhanced identity verification measures will be introduced later in 2024. These will apply to all new and existing company directors, PSC’s and relevant officers of a registerable relevant legal entity.

It is expected that there will be two types of identity verification, these include:

1. Direct verification via Companies house’ and 
2. An indirect verification route through an Authorised Corporate Service Provider (ACSP).

The Act requires that existing directors also need to verify their identities. It will be a criminal offence for an individual to act as a director while their identity is unverified, and the company will be committing a criminal offence by allowing an unverified director to act.

There is potential that the proposed identity verification requirements will likely pose some difficulties for companies when it comes to filing information with Companies House, particularly in instances where complex corporate structures exist. 

We will endeavour to keep you updated as and when further guidance becomes available. 

Other Comments

Whilst further guidance is expected, we welcome the outlined changes, and it appears that Companies House is looking to proactively address existing issues in the current system. The introduction of the Act has enabled Companies House to alter its systems so fraudulent activity can be more easily identified. 

Transparency and streamlining appear to be at the heart of the changes; notably the introduction of the requirement to have a company email address and the abolition of the ability for a company to use a PO Box as its registered office address. What will be considered an ‘appropriate’ registered address requires further guidance however and there are similar questions as to whether a companies email address must be maintained/monitored.

We will continue to provide updates as and when they become available. If you have any questions in relation to the upcoming changes, please contact Chantelle Adadevoh, Prasan Modasia or Helen Curtis.

[1] Economic Crime and Corporate Transparency Act 2023 (legislation.gov.uk)