14 February 2024 – In a bid to deter economic crimes, the government will roll out changes to UK company law on 4 March.
The Economic Crime and Corporate Transparency Bill aims to introduce improved safeguards against financial crime. The bill will also enable Companies House to better bolster the economy and market the UK as an ideal place to become an entrepreneur.
To achieve this goal, major amendments were introduced to promote the registers’ transparency, accuracy, and security.
Lawful purpose, registered office and email addresses are high priorities in new bill
The new rules for registered office addresses are a significant highlight of the bill. Companies are required to have an appropriate address as their official registered office.
An appropriate address is defined as:
- any documents sent to the registered office should be expected to come to the attention of a person acting on behalf of the company
- any documents sent to that address can be recorded by an acknowledgement of delivery
In other words, PO boxes are now unusable as an official registered address. Businesses that fail to comply to change to an appropriate address will be removed from the register.
Other changes to UK company law emphasise the importance of a business registered email address. From 4 March, all companies must provide a registered email address.
They are also responsible for maintaining their official email address as they would their appropriate address.
On the other hand, shareholders must also put out a statement of lawful purpose. Included in the statement is a confirmation that the company’s intended future activities are indeed lawful.
These new statements will affirm that all new and existing companies have a duty to operate legally.
Identity verification for all PSCs
Companies House is also introducing an upgraded identity verification to discourage unlawful use of companies.
All directors and people with significant control (PSCs) will have to verify their identities for newly registered companies. Existing companies will also have a grace period to undergo the same process.
Information privacy for at-risk individuals
As more information is added to the register, Companies House is implementing safeguards against abuse of this data.
Concerned individuals can opt to suppress information such as residential addresses, date of birth, business occupation, and signatures from historical documents.
Under the changes to UK company law, individuals with heightened risks due to their personal information on the register can hide their names, sensitive addresses where public disclosure puts residents at risk, service address, and partial date of birth from public view.
3-year transition to software-only filing
Filing annual accounts with Companies House is more accessible with a new software-exclusive method of filing. This new format will require companies to file accounts digitally and sustainably.
All companies, and in extension directors who file accounts by themselves and companies who use third-party agents, will have to find suitable software before the 2-3 year transition period is over.
In addition, small and micro-entity companies must file their profit and loss accounts. Any claim to an audit exemption must also be backed by a director’s statement from the balance sheet.
More accessibility to limited partnership and company ownership data
Limited partnership (LP) information will be more accessible under the changes to UK company law. Come 6 March, LPs will have to do the following:
- provide partners’ names, date of birth and usual residential address
- verify the identity of general partners
- provide a registered office within the UK
- provide a standard industrial classification (SIC) code
- file an annual confirmation statement
They must also file their information through an Authorised Corporate Service Provider registered with Companies House.
Information on company ownership will also be widely available to the public. Companies must record their individual shareholders’ names and provide a complete, user-friendly shareholder list to comply with the new law.
Additionally, corporate directors will only be selected from UK corporate entities with a ‘legal personality’. They should also be natural persons and undergo identity verification.
Our Opinion
While changes to existing laws can seem scary, especially if you could potentially be struck off Comapnies House register. However, you should keep in mind that the aim of such laws is to stop criminals.
The law doesn’t aim at punishing real businesses and business owners. Nonetheless, it’s worth making sure that you understand the changes and how they impact on your business.
If you are unsure, you can watch the video Companies House has made to explain the changes. It’s easy to understand and follow.
As the changes are primarily about what information you provide to Companies House, you don’t need to worry about changing the way you run your business. You just have to make sure that you provide Companies House with all relevant information.
Some changes, such as the registered office address, you might have already submitted. You might even have an email address already registered with them. So complying with the changes to UK company law might not be much of a change for you at all.
