The Economic Crime and Corporate Transparency Act 2023 was passed into law only last year, but it has already had far-reaching consequences, with plenty more to come. One of the changes brought in by the legislation is abolishing the requirement for UK companies to maintain certain company registers.
In this blog, we look at which registers are being abolished, the reasons for their removal, and what it means for companies.
What are company registers?
The company registers are important internal documents that all companies registered in the UK have been required to maintain. The information contained in them helps determine who owns and controls a company. Preparing and maintaining them is an important task, and it is an offence committed by the company and its officers if they fail to do so.
So far, the company registers that all companies have been required to maintain are as follows:
- Register of directors
- Register of directors’ usual residential addresses
- Register of secretaries
- Register of members or shareholders
- Register of People with Significant Control
- Register of charges (for charges created before 6 April 2013)
Additional company registers can also be maintained – for example, the register of transfers (which lists out clearly all transfers of shares that have taken place) and the register of allotments (which lists out clearly all share allotments the company has made). These additional registers are optional, however, as they are not required by law.
What’s changing?
As a result of changes brought in by the Economic Crime and Corporate Transparency Act 2023, companies registered in the UK will no longer be required to maintain the following registers:
- Register of directors
- Register of directors’ usual residential addresses
- Register of secretaries
- Register of People with Significant Control
Rather than maintaining these registers, the focus will now be on companies submitting the relevant information to Companies House. Existing directors and company owners will recognise that they have already been required to submit most of this information to Companies House.
The changes, therefore, concern the changing role of the public register (that is, the information available at Companies House). Beforehand, companies would submit this information to Companies House to “update them” or “let them know” of changes to their company. The submission itself largely did not give legal effect to those changes. Now, submission of this information to Companies House could be described as forming a key material part of the relevant process.
Let’s take the example of appointing a director. Once they have appointed a new director, companies have always been required to let Companies House know by filing the relevant form (usually Form AP01) with them. It did not matter if the appointment form was submitted to Companies House yet; the person who had been appointed was still a director.
Under the Economic Crime and Corporate Transparency Act 2023, however, this will no longer be the case. In addition to carrying out the internal director appointment procedure (for example, the shareholders of the company passing an ordinary resolution), the company will now need to submit the appointment information to Companies House and have the identity of the new director verified, before they can begin dispensing their duties as a director. Only once their information has been registered at Companies House, and their identity confirmed, will the person in question be able to act as director.
This example gives a clear demonstration of the changing role of Companies House transitioning away from a simple recipient of information submitted to them, and now playing an integral part in determining the key positions in a company.
Why are the registers being removed?
One of the main reasons for the abolishment of these registers is the implementation of identity verification of directors and People with Significant Control at Companies House.
When fully implemented, all persons who are listed as either a director or Person with Significant Control of a UK-registered company will need to have their identity checked and confirmed with Companies House. As we saw in the above example, not verifying a person’s identity can have major ramifications as to a person’s position – it is also an offence on the part of the company and its directors more generally.
This renewed focus on Companies House being the “central register” and the “law” concerning who owns or ultimately controls a company, has in part made the internal company registers redundant from a strictly legal point of view.
When are the registers being abolished?
Although the Economic Crime and Corporate Transparency Act 2023 received Royal Assent in October 2023, many of its provisions are not yet in force. At the time of writing, this includes the sections relevant to the company registers. So, companies need to keep a watchful eye on its implementation, as it’s expected in the coming months.
Companies House have created a website dedicated to explaining the changes that are being implemented, and when those changes are coming into force. You can view this dedicated website here.
What about the register of members?
As mentioned above, the register of members is not one of the registers being abolished. All UK-registered companies must therefore continue to maintain this register, in accordance with section 113 of the Companies Act 2006.
Perhaps one of the key reasons the register of members has not been abolished is that there is no identity verification being introduced for shareholders (although some, through their position, may still need to be identified due to being a director and/or person with significant control).
As a result of this, the importance of getting the information onto the public record immediately is reduced. That’s not to say you don’t have to report who your shareholders are (and any changes that take place) – you do, but you can just wait until your next confirmation statement is due (which could be as long as 12 months away).
Further, under both legislative and common law, the register of members is considered prima facie evidence of who is a shareholder. This means that the information in the register of members is viewed as evidence in its own right as to who does (or does not) hold shares in a company. This important concept and the fact identity verification changes don’t concern shareholders, is one of the key reasons the register of members is being retained.
Do I still need to maintain my company registers?
So, the question therefore arises, do I still need to maintain company registers?
As mentioned above, the register of members continues to be required by law, so you will still need to maintain this. The changes in the law have not changed this register’s position.
Concerning the other registers we have discussed in this blog, until the relevant provisions of the Economic Crime and Corporate Transparency Act 2023 have been implemented, companies are still required to maintain them.
Even when the legal requirement is taken away, however, it may still be beneficial for companies to continue maintaining them.
One reason companies may still wish to maintain these company registers is that they may be required at any time to for due diligence purposes, such as when your company is engaging with a third party (particularly from abroad) or your company is undergoing an acquisition, takeover or merger negotiations. Completed company registers are usually required at this stage, and they have the added benefit of presenting information on who owns and controls companies very clearly, which will be particularly beneficial when dealing with persons abroad who may not be familiar with the UK as a jurisdiction.
Another reason you might still want to keep your company registers is the fact you are still required to keep the register of members, which is presented in a specific format. It may therefore be helpful to present all other important information regarding the company (who controls it and who directs it, etc.) in the same way as you’ll present your shareholder information, which again makes it easier for third parties to get a clear picture of your company.
How Quality Company Formations can help
If you are looking to form your company through us, we offer a range of packages that include your first set of company registers completed for you.
Once a company your company has been formed, you may also wish to explore our Full Company Secretary Service. This comprehensive service includes several useful features, such as helping you make up to 15 changes to your company every year (including preparation of all the company secretarial documentation needed to make those changes, obtaining the signatures and approvals, and completing the required filings at Companies House). Also included in the service is the preparation and maintenance of all your company registers, including the legally required register of members.
If you would like to speak to us about how our services can help you, feel free to contact our London-based team directly, if you need to set up a company, or would like to find out more about our services.
So, there you have it – changes to company registers
The preparation and maintenance of your company’s registers have always been a crucial part of your company’s legal compliance. Whilst some registers may no longer be compulsory, the all-important register of members will continue to be compulsory for companies to maintain, and there will remain legal consequences for failing to do so. Even if they aren’t required by law, keeping your other registers maintained may also be useful, for example if you sell your company in the future. What is certain is there will be a place for those company registers, for a long time to come.
Please comment below if you have any questions. For more business advice and limited company guidance, explore the Quality Company Formations Blog.
