ECCTA: Reforms to Companies House

What are the new requirements?

The ECCTA introduces a new set of statutory objectives for Companies House to:

1. ensure that those required to deliver documents to the Registrar do so, and that the requirements relating to proper delivery are complied with
2. ensure that documents delivered to the Registrar contain all of the information that they are required to, and that the information provided is accurate
3. minimise the risk of information on the register creating a false or misleading impression to members of the public
4. minimise the extent to which companies and other firms (a) carry out unlawful activities; or (b) facilitate the carrying out by others of unlawful activities

In practice, these are fulfilled by new powers to, amongst other things:

• reject documents for inconsistencies
• require resolution of inconsistencies
• require additional information to be provided in relation to a filing
• remove material from the register even after it has already been accepted
• analyse information for the purposes of crime prevention or detection where the Registrar considers it appropriate

The ECCTA provides for a far more robust approach from Companies House regarding filings, diverging from its previously passive stance of generally uploading whatever information is provided. The powers to investigate and require resolution of inconsistencies in the register may particularly present issues where new filings are inconsistent with historically erroneous ones. Dealings with Companies House are also going to be more expensive with the fees for filings and other engagements with Companies House (including in relation to the Register of Overseas Entities) will increase from 1 May 2024 – see here for the list of increased fees.

When dealing with incorrect filings, Companies House will take a different approach depending on whether or not the filing has been completed. If a query is raised by Companies House when information is first sent to the Registrar then the filing will be rejected and a reason provided. The company will then need to address the reason before attempting the filing again. If an issue is spotted with information that has already been filed at Companies House, the Registrar will send a notice to the relevant company requiring information to be provided within a certain timeframe. Companies House can query information based on its own knowledge but may also do so if a concern is raised by a third party. A failure to respond to a notice from Companies House will constitute an offence but there has been some reassurance given by the government that the power to require information will be used sparingly.

In addition, Companies House is empowered by the ECCTA to proactively disclose information to certain persons or bodies (e.g. government bodies, law enforcement bodies and insolvency practitioners) for purposes connected with the exercise of its functions, provided it does so within the confines of existing data protection legislation and obtains HMRC authorisation where relevant. Where information is shared for the purpose of preventing, detecting and investigating economic crime, Companies House will be exempt from any civil liability for breach of confidentiality in relation to the disclosure. However, the increased information sharing powers are balanced by greater protection of personal information such as a new process whereby individuals (or a company on behalf of an individual) can apply to have their personal information suppressed from the public view.

When do they take effect?

The Economic Crime and Corporate Transparency Act 2023 (Commencement No.2 and Transitional Provision) Regulations 2024 brought the majority of Part 1 (Companies etc) of the ECCTA into force on 4 March 2024, including the following measures:

• the ability to scrutinise and reject information that seems incorrect or inconsistent with information already on the register and, in some cases, removal of information
• stronger checks on company names
• new rules for registered office addresses which will mean all companies must have an appropriate address at all times (for example, a PO Box will not be sufficient)
• a requirement for all companies to supply a registered email address:
  • companies formed after 4 March 2024 will be required to give their registered email address upon incorporation
  • existing companies must supply a registered email address along with any confirmation statement filed with a date from 4 March 2024 onwards
• a requirement for subscribers to confirm that they are forming a company for a lawful purpose upon its incorporation and that a statement be included on each subsequent confirmation statement that the intended future purposes of the company remain lawful. Existing companies will need to make this statement in any confirmation statement with a date from 4 March 2024 onwards
• making annotations on the register to let users know about potential issues with the information that has been supplied to Companies House
• taking steps to clean up the register, using data matching to identify and remove inaccurate information
• sharing data with other government departments and law enforcement agencies

What should I do now?

It is important to make sure that filings are done correctly and not as an afterthought, as breaches or incorrect filings may be picked up and penalised more actively by Companies House using its new powers. Companies may also wish to audit their existing filings (or at least recent ones) for accuracy to avoid being penalised for inconsistency on future filings. Fines and higher fees are one way in which Companies House is planning to fund other reforms under the ECCTA so we are expecting it may be quite enthusiastic in exercising its new powers.

If your company currently relies on a PO Box for its registered office address, you will need to identify a new registered office and update Companies House as soon as possible. We also recommend identifying or creating a suitable email address to use as your registered email address going forwards. Ideally this will not be linked to a particular employee in case that person leaves the company.

If you would like to explore the company secretarial support we can offer (including provision of a registered email address), please contact Cosec@stevens-bolton.com.

What are the consequences of not complying?

The ECCTA creates a new civil penalties regime which allows Companies House to impose civil penalties for breaches of the Companies Act 2006 directly rather than relying on pursuing criminal prosecutions for enforcement. Under the Economic Crime and Corporate Transparency Act 2023 (Financial Penalty) Regulations 2024, Companies House is able to impose fines up to a maximum of £10,000 from 2 May 2024 and may enforce with greater enthusiasm without the administrative and financial burdens of having to go through the court process.