What’s new with Companies House? Updates and reforms in 2024

What's new with Companies House? Updates and reforms in 2024

In a bid to strengthen the UK's financial landscape against unlawful activities and reinforce corporate transparency, the UK government has introduced the Economic Crime and Corporate Transparency Act 2023 (the Act).  The Act seeks to implement significant reforms to Companies House as well as introduce a new corporate offence for failure to prevent fraud. With increased government focus on the misuse of corporate structures for money laundering, tax evasion, and other criminal purposes, these reforms are designed to foster a more accountable and resilient business environment.

In March this year, the first wave of reforms to Companies House detailed in the Act came into force.

Some more significant changes, as detailed below, will follow. The precise timing for implementation is yet to be confirmed - Companies House will need to make a number of changes to ensure its systems are compatible with the new requirements and certain aspects of the Act require secondary legislation and guidance (which is still to be published). 

March 2024 reforms

With effect from 4 March 2024:

  • Companies House in Belfast is no longer accepting any physical forms or filings by hand delivery.
    If you physically hand delivered documents to Companies House in the past, you will now need to post paper forms to the Companies House central office in Cardiff.  Ultimately, this change, alongside the recent fee increases, is designed to encourage online filings wherever possible.  We would recommend either ensuring you are registered for the PROOF scheme to facilitate online filings or, where the preference is to continue to make hard copy filings, taking additional care to ensure relevant filings are posted well in advance of the filing deadline.
  • A company’s registered office should now be an ‘appropriate address’ where documents will come to the attention of someone acting on behalf of the company and acknowledgment of delivery can be recorded.
    This means companies will no longer be able to use a PO box as their registered office address. They can continue to use third party service providers if they meet the requirements above.
    ALG will continue to offer a ‘Registered Office’ service to our clients to deal with post in an appropriate manner and ensure all important documents are passed to the relevant individuals within a Company in a timely manner.
  • Companies will be expected to register an ‘appropriate email address’ with Companies House for service of important information in addition to letters.

Enhanced verification procedures

Further scrutiny will be felt through the introduction of enhanced verification procedures at Companies House i.e., ID checks.

Under the proposed reforms, companies will be required to provide more comprehensive and accurate information in respect of its directors and beneficial owners during the incorporation process. It is expected that over the course of 2024, existing directors will also be required to verify their identities on delivery of the company’s next confirmation statement. 

Identity verification will digitally link a person with a primary identity document, such as a passport or driving licence. The person undergoing verification will take a photograph or scan of their face and the identifying document. The two will be compared, using likeness matching technology, and the identity verified. If successful, the person will be notified in real time.

If a Company is using an authorised corporate service provider (ACSP), such as a law firm or accountant, then the ACSP will be required to register with Companies House.

Where a new director of a company acts as a director without first having their identity verified, or an existing director does not verify their identity within the grace period and continues in their role, an offence will be committed by the individual, the relevant company and every officer who is in default. There are parallel offences as relates to non-verification of PSCs and other individuals who are required by the legislation to have their identities verified.

Beneficial ownership reforms

One of the key provisions of the Act is the requirement for companies to disclose beneficial ownership information. Companies will be obliged to register and maintain accurate records of their ultimate beneficial owners, including individuals who directly or indirectly own or control more than a certain percentage of the company's shares or voting rights.

These measures go over and above the current PSC/RLE reporting requirements as Companies House seeks to specifically identify individual actors at the top of the chain of ownership for all UK companies. By shedding light on the individuals who ultimately own and control UK companies, the government is seeking to curb financial crime, enhance regulatory oversight, and bolster the UK's reputation as a global leader in transparency and governance.

This central register will be accessible to law enforcement agencies, regulatory bodies, and other authorised parties. By making this information readily available, the reforms aim to deter the use of shell companies and nominee directors, thereby making it easier to trace and investigate those potentially involved in economic crimes.

Directors will be obliged to ensure that their company's beneficial ownership information is kept up-to-date and submitted to Companies House in a timely manner. Failure to comply with these obligations is said to result in penalties, fines, and potential criminal liability for both the company and its directors. However, the scale of the financial penalties or approach to enforcement is not yet known.

New power to query and challenge filings

Companies House will have greater powers to query and challenge information that appears to be incorrect or inconsistent with information it holds. It will have the authority to reject new company incorporation requests and statutory filings and annotate the register to show when someone has an “unverified status”. These powers include the ability to request more detailed information from companies, conduct inspections, and impose penalties for non-compliance. These measures are intended to enhance Companies House's ability to monitor compliance, identify suspicious activities, and take appropriate enforcement actions.

Additionally, the Act introduces measures to streamline the process of company registration and enhance the accuracy of corporate data held by Companies House. The reforms are set to leverage digital technologies and modernise Companies House systems, to expedite administrative processes and seek to reduce hurdles.

Centralised statutory registers

Lastly, the Act abolishes the requirement for companies to maintain various internal statutory registers, including the register of directors, register of directors’ residential addresses, register of secretaries and PSC register – it is intended that this information will be held online on the Companies House central register going forward.  There is no set date yet for when this will come into force therefore, Companies should continue to update their statutory registers as normal until we have more clarity on the timeline for implementation.

ALG’s corporate team include experienced lawyers and company secretarial advisors who are equipped with the latest knowledge and developments on the Act. We are available to advise and assist our clients with complying with this new legislation.

For more information, please contact Sarah Dugdale, Partner, Claire McGurk, Solicitor or your usual Corporate team contact.

Date published: 22 April 2024