The first phase of the reforms to UK Companies House made by the Economic Crime and Corporate Transparency Act 2023 (ECCTA) went live on 4 March 2024. The reforms broaden the objectives and powers of Companies House, changing it from a largely passive recipient of information into a more active gatekeeper over company creation and scrutiniser of information.

At the same time, various other changes made by ECCTA to the Companies Act 2006 have also been brought into force, with more to follow in due course.

Background

ECCTA contains a wide range of measures to tackle economic crime and improve corporate transparency. While other parts of ECCTA deal with the wider aspects of economic crime, including a new offence of failure to prevent fraud, enforcement over cryptoassets and reforms to the Register of Overseas Entities, Part 1 is focused principally on Companies House and UK corporates.

Changes introduced on 4 March 2024

The key changes in Part 1 of ECCTA introduced on 4 March include the following.

New Companies House objectives and powers

Companies House now has enhanced objectives which require it to promote and maintain the integrity of the registers it maintains. To support these objectives, ECCTA equips Companies House with greater powers, including new powers to:

• reject a new filing if it appears inconsistent with information held by Companies House such that there are reasonable grounds to doubt whether the new filing is correct;
• require additional information to satisfy a query that Companies House has about information delivered to it (including information already on the register);
• require inconsistencies to be resolved; and
• remove non-compliant material from its registers.

In relation to the power to require additional information, Companies House has indicated that the power will be exercised with discretion, using a risk-based approach which prioritises the biggest risks to the integrity of the register and the quality of the information which it holds.

Companies House also has a new obligation to analyse information held by it for the purpose of preventing or detecting crime and new powers to share information with law enforcement agencies and other public authorities.

Requirement for email address

ECCTA requires all UK companies to provide a registered email address to Companies House. Companies House will use this email address to communicate with the company. It will not be available to the public.

Existing companies need to give a registered email address when they file their next confirmation statement with a statement date from 5 March 2024 onwards. New companies need to give a registered email address as part of the incorporation process.

The email address must be one where, in the ordinary course of events, emails would be expected to come to the attention of a person acting for the company. Companies should therefore register an email address which is actively monitored (which can be a third-party service provider) so that any communication from Companies House is picked up and can be dealt with.

Appropriate registered office address

ECCTA requires all UK companies to have their registered office at an appropriate location. This means a location where, in the ordinary course of events, documents can be expected to come to the attention of someone acting for the company (which can be a third-party service provider) and where delivery can be recorded by obtaining an acknowledgement of delivery.

For some companies, this may mean that they need to move their registered office address. For example, a company can no longer use a PO Box as its registered office address.

Companies House has the power to require a company to change its registered office if it is not an appropriate address.

Lawful purpose statements

As part of the annual confirmation statement process, a UK company will need to confirm that the intended future activities of the company will be lawful. This applies to all confirmation statements with a statement date from 5 March 2024 onwards.

A similar statement is also required as part of the application process when incorporating a new company.

Company names

There are new restrictions on company names. A UK company cannot be registered with a name which contains computer code, which would be likely to give the false impression that the company is connected with a foreign government or international organisation, or which is intended to facilitate offences involving dishonesty or deception. There are related restrictions on the use of business names more generally in the UK.

These restrictions are accompanied by enhanced enforcement powers for the Registrar of Companies.

Directors and disqualification

There is some tightening of the rules relating to the disqualification of directors. A director who is disqualified under the Company Directors Disqualification Act 1986 (CDDA) automatically ceases to hold office and any appointment of that person as a director of a UK company is void.

There are also amendments to the CDDA to allow for disqualification of persons designated under UK sanctions legislation. (A further new ground for disqualification for persistent breaches of companies' legislation has not been implemented in this round of changes.)

Limited liability partnerships

The requirements relating to email addresses, registered offices, lawful purpose statements, names and disqualification have been copied across so that they apply, with appropriate adaptations, to UK limited liability partnerships and their members.

Future changes

One of the most radical changes that Part 1 of ECCTA makes is the requirement for directors, people with significant control and those delivering information to Companies House to verify their identities. There is no firm timetable for this aspect of the reforms, which requires significant development to Companies House's systems and other implementation work.

Other changes in Part 1 of ECCTA which will be implemented in due course include:

• the abolition of the requirement for companies to keep their own registers of directors, directors' residential addresses, secretaries and people with significant control;
• some changes around membership information which must be supplied to companies and which companies must supply to Companies House;
• enhanced rights for individuals to have personal information suppressed from public view to prevent the abuse of personal information;
• restrictions on corporate directors (anticipated to be limited to UK bodies corporate whose directors are all natural persons);¹
• a prohibition on a new director acting where their appointment has not been notified to Companies House within 14 days of appointment and for so long as the notification remains outstanding;
• some changes to the filing requirements for annual accounts (mostly focused on small companies and micro-entities); and
• enabling the government to make regulations which would require those carrying on business in the UK to carry out discrepancy reporting (i.e. collect specified information about customers and report any discrepancies with the information publicly available at Companies House).

These will also be copied across to UK limited liability partnerships as appropriate.

Additionally, various wide-ranging changes to limited partnership law contained in Part 2 of ECCTA remain to be implemented. These will modernise the law governing UK limited partnerships and tackle their misuse by implementing more stringent registration requirements, increasing transparency and obliging limited partnerships to maintain a connection with the UK.

Increased fees

Companies House fees are set on a cost recovery basis. It will be increasing its fees² from 1 May 2024 to reflect the costs of funding its enhanced objectives and powers.

1. Technically this change is being made under the Small Business, Enterprise and Employment Act 2015, but it will be implemented alongside the ECCTA reforms.↩
2. https://changestoukcompanylaw.campaign.gov.uk/changes-to-companies-house-fees/↩