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Article

The Economic Crime and Corporate Transparency Bill

Article

The Economic Crime and Corporate Transparency Bill

15 Jan 2024

3 minute read

The Economic Crime and Corporate Transparency Bill received Royal Assent on 26 October 2023, becoming the Economic Crime and Corporate Transparency Act 2023 (ECCTA).

The Economic Crime and Corporate Transparency Bill - news article image

The Economic Crime and Corporate Transparency Bill received Royal Assent on 26 October 2023, becoming the Economic Crime and Corporate Transparency Act 2023 (ECCTA).  

The Government introduced the Bill in order to reform the role of Companies House and improve transparency over UK companies (and other legal entities). The intention behind it is to crack down on fraud, money-laundering and other economic crimes by tackling misconduct at source.

There are several aspects to the Act but the main changes introduced to Companies House include identity verification for all new and existing registered company directors and people with significant control, the improvement of information on the register and additional compliance requirements.

Some measures in the Act will require secondary legislation and internal systems development by Companies House before they are introduced however, other measures are expected to come into force sooner (early 2024). There will be a transitional period for existing companies and LPs to meet the identity verification requirements and to become compliant.

New verification requirements

The passing of the Bill will prevent those setting up companies under false identities from hiding money behind unverified names. This mean that Companies House can check, remove or decline information submitted to, or already on, the companies register.

Identify verification can be undertaken via Companies House or through an Authorised Corporate Services Provider (ACSP) such as an accountant or legal advisor. Alternatively, an individual seeking to file documents with the Registrar directly will need to first verify their identity.

Improving financial information

The Government would like the register to be more reliable and accurate and reflects the latest advancements in digital technology. As part of this, each company on the register must have a registered email address and there will be new rules for registered office addresses. All companies must, at all times, have an ‘appropriate address’ as their registered office with the ability for  documents received to be recorded and to come to the attention of a person acting on behalf of the company. Therefore, the use of PO Box’s will no longer be allowed to be used as a registered office.

Additional compliance requirements

The new Act will introduce a range of additional compliance requirements for companies with small and micro accounts. In the fullness of time, these entities will no longer able to file abridged accounts, and must file their profit and loss account in an Inline Extensible Business Reporting Language (iXBRL) format. Those who use Limited Partnerships (LP’s) in corporate structures and, the amount of information required by Companies House will increase.

Much of the information that will be required to file with the Registrar must be submitted by an ACSP.

Register of Overseas Entities

It is worth noting that the Register of Overseas Entities which requires overseas entities that own UK land or property to declare their beneficial owners or managing officers came into force on 1 August 2022 and my colleague Darshil Shah’s article explains more.

Enforcement of the Act

Companies House will be given broader powers, including more effective investigative and enforcement powers. The Act will give the Registrar authority to request additional information on filings, and to query, amend or remove information where it is not satisfied about the accuracy of information provided.

How we can help

As we are awaiting the implementation of the systems within Companies House, there is no immediate rush to act on some aspects of the Act. However, we can assist clients in reviewing corporate structures and provide support with restructuring/removing surplus entities/ LPs as required. It has been noted that the earlier measures will include the fact that companies must file a verified email address and cannot use a PO Box as their registered office - this is something we will be acting on to bring our clients up-to-date.

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Need expert advice?

Speak to an expert for advice on
+44-1865 292200 or get in touch online to find out how Shaw Gibbs can help you

Email
info@shawgibbs.com

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