Companies House is Changing!

All new and existing company directors, persons and relevant legal entities with significant control will be required to undergo an identity verification process, either directly (through Companies House) or indirectly (through a verification statement from an authorised corporate service provider (ACSP)).

The identity verification process aims to reduce the risk of fictitious directors or beneficial owners being registered at Companies House, thereby preventing illicit activities which exploit corporate structures.

Individuals will only be able to deliver documents to Companies House on behalf of another person if:

• their identity has been verified;
• they are an ACSP;
• they are an employee of an ACSP acting in the course of their employment; or
• they are exempt.

Such filings will also need to be accompanied by a statement confirming that person's authority and confirmation of their verified status.  

The ECCTA will bring the most transformative developments to the role of Companies House since its inception 180 years ago.

By enhancing Companies House integrity, the ECCTA contributes to a more effective record-keeping system that will protect individuals and businesses.

At present, Companies House is required to accept and display on the register documents which are filed in good faith and are unable to carry out investigations where underhand activity is suspected.

Criminals have notoriously abused this system by using company registers to conceal illegal activities.

The new legislation bestows upon the Companies House more extensive powers to query and reject filings, seek evidence for, amend or remove information, and, where necessary, share it with law enforcement agencies.

This means that the role of Companies House will transition from a passive registrar to an active custodian.

It is anticipated that it will take some time before the provisions of the ECCTA are implemented due to the need for secondary legislation and to allow for the development of Companies House guidance, systems, and processes.

There are, however, things that companies can be thinking about in readiness for the changes set to come into force.

Business owners can leverage the opportunity created by the new legislation to proactively assess their existing corporate structures and show a commitment to corporate transparency.

Embracing these changes will help prevent economic crime whilst also contributing to the overall stability of the UK business landscape and driving economic growth by encouraging investor confidence.

Those responsible for company record-keeping and administration would be well advised to have the following items on their radar:

• identifying who may be subject to the new identity verification requirements;
• assessing current practices for Companies House filings and considering how these may need to be adapted;
• ensuring that company records are complete and up-to-date; and
• checking whether any companies within a group structure have appointed corporate directors.

Companies House getting teeth is going to be a real game changer.

Whilst it will potentially increase the amount of red tape for business owners, it should create a much more secure and accurate record of the Register of Companies.