On 22 September 2022, the Economic Crime and Corporate Transparency Bill (Bill) was introduced to Parliament. It forms the second part of a package aimed at tackling economic crime and preventing the misuse of UK corporate entities. (The first was the Economic Crime (Transparency and Enforcement) Act 2022 which established the new register of beneficial owners of entities that hold UK land, launched by Companies House on 1 August 2022. You can read our briefing on the new register here).
Greater powers for Companies House
The Bill will give the Registrar of Companies significant new powers. Companies House will be able to query any filings (including company names), where information appears to be erroneous, suspicious, or might otherwise impact on the integrity of the register or wider business environment. All information supplied to the Registrar or information already on the register will be within the scope of this new power. The Registrar will be able to reject documents submitted for filing if it appears to the Registrar that a document that has been submitted is inconsistent with other available information, and there are therefore reasonable grounds to doubt whether the document complies with requirements.
The Registrar will have enhanced powers to remove information from the register, and will be able to require all documents and information to be filed electronically.
Identity verification
New and existing company directors, LLP members, general partners of limited partnerships and people with significant control (PSCs) will need to verify their identity with Companies House, as will anyone filing information. A company will not be able to register the appointment of a director unless the director has set up an account and verified their identity. Existing directors and PSCs will have a fixed period within which to verify their identity. Failure to do so will be a criminal offence and/or incur a civil penalty. Companies with an unverified director will also commit an offence. UK company formation agents who register with Companies House will be able to carry out identity verification.
Information sharing
Companies House will be able to proactively share data with law enforcement, regulatory bodies and other public authorities to assist in the carrying out of its own functions, or to assist a public authority with the exercise of its functions.
Limited partnerships
The Bill enhances the registration and transparency requirements for limited partnerships. It will also give the Registrar the power to deregister limited partnerships that are dissolved or no longer carrying on business, or where a court orders that it is in the public interest to do so.
Timing
The Bill may receive Royal Assent before the end of the year, but these reforms will require additional secondary legislation and guidance, as well as developments to Companies House systems. So we can expect some time to elapse whilst Companies House fully prepares for these changes.
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