Several changes to UK company law have been introduced by the new Economic Crime and Corporation Transparency Act, which received royal assent on 26 October 2023. The first measures are due to come into effect on 4 March 2024. These include new rules for registered office addresses and changes to annual accounts filing and confirmation statements.
This post provides a summary of 9 new measures you need to know about as a company owner or director, a PSC, or a member of a limited liability partnership or limited partnership. Anyone who files on behalf of a company or incorporated partnership should also familiarise themselves with these changes.
1. Greater powers for Companies House
The changes to UK company law give the registrar new and enhanced powers, enabling Companies House to improve the accuracy and quality of information held on the public register. These include:
- stronger checks on company names that are at risk of giving a false or misleading impression to the public
- querying, challenging, and rejecting information that appears to be incorrect or inconsistent with the information already held at Companies House
- removing false, fraudulent, inaccurate, or incomplete information from the public register more quickly
- using annotations on the register, to inform users about potential issues with the information that has been supplied to Companies House
- using data matching to identify inaccurate information and remove it from the register
- sharing information with other government departments and law enforcement agencies
- implementing a new identity verification process for certain individuals associated with companies
Companies will face serious consequences if they fail to respond to a formal request from Companies House to provide more information. These could include financial penalties, annotations on the company’s record, and even the prosecution of directors.
2. Registered office address requirements
The new rules for registered office addresses require companies (including LLPs) to use an ‘appropriate address’ as their registered office at all times.
An address is deemed an ‘appropriate address’ if:
- any documents sent to a company’s registered office by hand or post would be expected to come to the attention of a person acting on behalf of the company
- the delivery of any documents to that address can be recorded by an acknowledgement of delivery
In light of these changes, companies will no longer be able to use a PO Box as a registered office address. If you currently use a PO Box, you should change your registered office to an appropriate address by 4 March 2024.
There may be serious repercussions for any company that fails to adhere to these new rules. Where a registered office address is not appropriate, the registrar will change it to a default address held at Companies House. If this happens, the company has 28 days to provide an appropriate address and evidence of proprietary ownership, to avoid being struck off the public register.
3. Changes to annual accounts
Over the next 2 to 3 years, Companies House will be transitioning toward the filing of annual accounts by software only. This change will apply to company directors who file accounts themselves, as well as companies who use accountants or other third-party agents to prepare and file their annual accounts.
To comply with the new requirement to deliver accounts in digital format, all companies must take steps to find suitable software before the web-based and paper filing options are removed. Software is already available, so most companies can make the necessary changes to their accounts filing now.
Small companies and micro-entities will also be required to file their profit and loss accounts. Additionally, any small company that doesn’t qualify as a micro-entity will need to include a directors’ report. The option to file ‘abridged’ accounts will be removed.
Companies claiming audit exemption will have to provide an additional directors’ statement on the balance sheet. The directors will be required to specify which exemption they are claiming and confirm that the company qualifies.
Further information on changes to small company accounts filing options is available from Companies House.
4. Confirmation statement changes
From 4 March 2024, existing companies must provide a registered email address to Companies House when they file their next confirmation statement. New companies will be required to provide this information when they incorporate.
The registrar will use this registered email address to communicate with the company. It will not be disclosed on the public register.
Additionally, all companies will be required to confirm that their intended future activities will be lawful. This statement must be confirmed at the time of incorporation (for new companies) and every year on the confirmation statement.
5. New identity verification process
Over the coming months, a new identity verification process will be introduced in a bid to deter the use of companies for illegal purposes. This requirement will apply to anyone who sets up, runs, owns, or controls a company in the UK, including:
- company directors
- people with significant control (PSCs)
- members of limited liability partnerships
- any person acting on behalf of a company
For new companies, identity verification must be completed at the time of incorporation. There will be a transition period for individuals in existing companies to verify their identity with Companies House.
An identity verification service using ID documents will be made available at Companies House. Authorised agents, such as company formation agents and accountants, will also incorporate the Companies House identity verification process in their existing checks.
There is no need to do anything at the present time. Companies House will publish detailed guidance at a later date.
6. Protecting personal information on the public register
In a phased approach over the next two years, Companies House will introduce greater protection of personal information on the public register.
Individuals will be able to apply to the registrar to suppress the following personal information from historical documents that are currently available to the public:
- residential addresses (in most instances) when disclosed elsewhere on the register (e.g. when used as the registered office address of a company)
- day of birth shown on documents registered before 10 October 2015 (since that date, only the month and year of birth have been publicly disclosed)
- business occupation
Where an individual is at personal risk of physical harm or violence (e.g. domestic abuse survivors) as a result of their personal information being disclosed on the public register, they will be able to apply to Companies House to have their details protected from public view. This includes:
- their name (or previous names)
- sensitive addresses where public disclosure will put residents at risk (e.g. a women’s domestic abuse refuge)
- in the most serious cases, all other personal information (e.g. service address details and partial date of birth)
These measures require secondary legislation before they can be implemented. Further guidance on protecting your personal information is available from Companies House.
7. Changes to limited partnerships
As a result of changes to UK company law, limited partnerships (LPs) will be required to file their information through authorised agents and provide more information to Companies House.
Under these new measures, limited partnerships must:
- provide the name, date of birth, and usual residential address of every partner
- verify the identity of general partners
- provide a UK registered office address
- provide a standard industrial classification code (SIC code) to describe their business activities
- file an annual confirmation statement with Companies House
The new rules will apply to new and existing limited partnerships. Existing LPs will have a 6-month transitional period from the commencement of the new legislation to meet these new requirements. Any LP that fails to do so will be deregistered by Companies House at the end of the transitional period.
8. Improving transparency of company ownership
To make corporate ownership more transparent, UK companies will soon be required to:
- record the full name of every shareholder who is an individual (or the full names of corporate members and firms) in their statutory registers
- provide a one-off full list of shareholders, to enable Companies House to display shareholder information on the public register in a way that is more user-friendly
Companies House will also:
- collect and disclose more information from any company that claims an exemption from providing information on people with significant control (PSCs), including the reason for the exemption
- collect and disclose the conditions that allow a relevant legal entity (RLE) to be recorded as a person with significant control
Additionally, restrictions will be imposed on the use of corporate directors. When the changes to UK company law come into effect, companies will only be permitted to appoint a UK corporate entity with a ‘legal personality’ as a corporate director.
Moreover, the directors of these corporate director firms must be natural persons (i.e. individuals, not corporate entities), and they will be required to verify their identity.
9. Changes to internal company registers
Currently, companies have a legal obligation to keep several statutory company registers at their registered office or SAIL address. However, under the new act, the government will remove the requirement for companies to maintain the following internal company registers:
- Register of directors and register of directors’ usual residential addresses
- Register of company secretaries
- PSC register
Companies must continue to file details of their directors, secretaries, and PSCs at Companies House for disclosure on the public register. The requirement to keep other statutory company registers, including the register of members, will remain in place.
No date has been announced for when these changes will take place. Companies should continue to maintain their internal registers in the meantime.
Who is affected by these changes to UK company law?
The changes to UK company law introduced by the Economic Crime and Corporate Transparency Act bring new responsibilities for:
- all new and existing directors of UK companies
- people with significant control of a company or LLP
- members of limited liability partnerships and limited partnerships
- anyone who files on behalf of a company or LLP (e.g. accountants, company formation agents, and company secretaries)
The new legislation generally applies to all company types and other corporate entities registered with Companies House in England and Wales, Scotland, or Northern Ireland, including:
- private companies limited by shares
- private companies limited by guarantee
- public limited companies (PLCs)
- limited liability partnerships
- limited partnerships
- community interest companies (CICs)
- overseas companies
Whether you already have a company or are planning to set up a new company shortly, it’s important to understand these new measures and the impact they will have on you and your business.
Increases to Companies House fees
To fund the cost of its new powers and the measures introduced in the Economic Crime and Corporate Transparency Act, Companies House fees will increase in 2024. The changes to fee values will take new future expenditure into account whilst also ensuring costs are recovered from existing expenditure.
Detailed information on the changes to fees and when they will come into effect is not yet available. Companies House will publish updates online in due course. You can also sign up for the Companies House newsletter to receive regular updates.
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GOV.UK provides additional information on the changes to UK company law. For more small business news and limited company guidance, check out the Quality Company Formations Blog today.