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The Economic Crime and Corporate Transparency Act: What you need to know

The Topline

“The Economic Crime and Corporate Transparency Act, which received Royal Ascent on 26 October 2023, includes some of the most significant changes to Companies House since it was created in 1844. Businesses which have a UK footprint, will need to review these changes carefully and act accordingly.”

Charlotte Bontoft, Senior Associate, Corporate

Charlotte-Bontoft

An image of two sky scrapers. A visual metaphor for the topic of this article, The Economic Crime and Corporate Transparency Act.

The Economic Crime and Corporate Transparency Act (the Act) received Royal Assent on 26 October 2023. This act includes significant changes to the UK’s company registry in over 170 years.

What does this mean?

The transparency reforms will mean individual directors and persons with significant control (PSCs) of UK companies, and overseas companies that have a registered UK branch/establishment) will be required to verify their identities by providing photographic ID to Companies House. Some examples are as follows:

  1. There a corporate entity is registered as a registerable legal entity (RLE as part of the PSC regime), at least one individual who is a director and/or officer of that entity will need to be verified.
    • Where a company has a corporate entity registered as a corporate director, all directors of that entity will be required to be verified.
      • Where there is a corporate general partner, a named individual managing officer of that corporate general partner will be required to have their entity verified.
        • Where the corporate general partner has corporate managing officers, a named individual managing officer of every corporate managing officer also needs to be verified.
          • Individual general partners of UK limited partnerships will be required to have their identity verified.

          What is the aim?

          All entities on Companies House will have at least one fully verified natural person directly associated with such entity which is available in the public domain/on the public register to increase transparency.

          How will this work in practice?

          For directors: To register an individual director’s appointment at Companies House, such individual will be required to have an account with Companies House where their identification has been verified.

          For PSCs: These can be registered without the individual having a verified account, however, such individual will be flagged as not verified until the relevant PSC has verified their identification with Companies House. Should the PSC fail to complete their verification, they will have committed a criminal offence and may be liable to a civil penalty.

          This requirement for identity verification will apply to existing and new appointments. We are awaiting publication of the transitional period that verification will take place along with details of the verification process.

          Only (1) “authorised corporate service providers” or ACSPs (e.g. solicitors’ firms and/or individual or firms who are supervised for money laundering legislation), and (ii) individuals who have had their identity verified, will be authorised by Companies House to make such filings.

          Some further changes

          • A company will no longer be required to keep its own register of directors (including the register of directors’ residential addresses), register of secretaries and PSC register, as such information will be held at Companies House only.
            1. The register of members will be the sole register that a company will need to keep and maintain. This register is expected to have increased requirements about its shareholders (including those held under trust and nominee arrangements which are expected late 2023) and an annual list of shareholders will need to be provided to Companies House within the confirmation statement.
              1. In addition to having a registered office at Companies House, both companies and limited partnerships will be required to have a registered email address. For existing companies and limited partnerships, the next confirmation statement filed after this section of the Act comes into effect will need to contain the relevant email address.

              The Economic Crime and Corporate Transparency Act: How we can support you

              The above are quite significant changes to UK company registers (and please note the above is not exhaustive) and will affect all such companies/branches registered at Companies House. We are awaiting implementation of the Act by Companies House and businesses should liaise with their corporate solicitors, advisers and/or corporate secretary for further assistance in this area.

              If you would like more information or support, contact Charlotte, or our Corporate team to find out how we can support you.

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