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There have been recent changes in company law following the royal assent of The Economic Crime and Corporate Transparency Act 2023 (ECCTA), and the Registrar of Companies (Registrar) has been busy implementing the first phases of the reforms since the enactment of ECCTA on 26 October 2023. In August, Companies House announced in their business plan 2024-2025 regarding the final year of delivering their strategy and most recently, they have published the policy paper outlining the transition plan and indicative timeline for commencing the key reforms under ECCTA.
ECCTA has changed the Registrar in numerous ways. One of the main elements is to reform the role and powers of the Registrar. Currently, under the Companies Act 2006 (CA 2006), the Registrar’s main role is to register company information and make it available for public inspection. Part 35 of the CA 2006 provides the Registrar with some administrative powers, but these are limited and do not allow for much scrutiny over the integrity of information or to improve the accuracy of the public registers at Companies House. Through the ECCTA, the government introduced a new set of objectives for the Registrar aimed at improving the accuracy of information and safeguarding against misleading or unlawful activity. To enable the Registrar to meet these objectives, ECCTA introduced new powers for the Registrar whilst expanding existing ones. The main purpose of the reform is to increase trust in the UK business environment by improving the accuracy of information registered at Companies House and preventing abuse of corporate entities by criminals.
The new powers provided by the ECCTA include:
- A new power to require those forming or running companies to supply additional information.
- New powers to proactively share information with any persons for purposes connected with the Registrar’s functions or with other public authorities for purposes connected with their functions.
- Expansion of powers to remove material.
- Greater powers to change the address of a company’s registered office and take action against those who persistently fail to provide an appropriate registered office address.
- Removal of constraints on the Registrar’s powers to make rules which mandate digital delivery of documents and filings.
Power to request information
Up until recently, the Registrar was required by law to accept information if it was ‘properly delivered’ and had limited powers to correct or query information where there was a suspicion that it was erroneous or fraudulent.
ECCTA has introduced a new power that allows the Registrar to reject new filings if they are inconsistent with information held by the Registrar and, as such, are doubted as being compliant with requirements as to its contents. Further, the Registrar has also introduced a new power to compel the production of information to satisfy a query about information delivered, including already existing information. This power can be used where information is identified as potentially fraudulent, suspicious, or undermines the quality of information on the register and could enable individuals to pursue illicit activity such as fraud or economic crime.
The new powers:
- allow the Registrar to compel a person, on pain of criminal sanction, to provide information so the Registrar can decide about the queried filing;
- has a broad scope, encompassing all information supplied to the Registrar or already on the register;
- are a comprehensive tool for the Registrar’s work, particularly where information is identified as potentially fraudulent or suspicious or might otherwise impact the integrity of the register;
- will be used at discretion and with a risk-based approach. Querying powers will be prioritised in cases which present the most significant risks.
How will the querying power work?
Pre-registration: When the Registrar raises a query prior to registration, the filing will be rejected, and the reason will be provided. The corporate entity can resubmit the filing, ensuring that the query has been addressed and supplied with any required information. Where a filing has been resubmitted without addressing the query, the filing will continue to be rejected.
Power to share information
The government has also provided the Registrar with new powers to share data with law enforcement, regulatory bodies and other public authorities in carrying out its own functions, or to assist a public authority with the exercise of its functions. A new power is also provided to enable others to share information with the Registrar to assist it in carrying out its functions.
The information shared could be identified through analysis of information held at Companies House.
The Registrar will be able to share any information it holds with any relevant body provided that it meets one of the following conditions:
- to enable the Registrar to fulfil its statutory role and functions; or
- to enable public authorities to fulfil their statutory obligations or functions (including public authorities which perform crime prevention and national security functions).
This Registrar’s information sharing power will be available in respect of all information held by Companies House about any individual or corporate entity. It will also cover the full life cycle of an individual or corporate entity’s engagement with Companies House.
The Registrar will be able to share this information with any of the following:
- Public authorities – including any government body, local authorities, trading standards and any person or body discharging functions of a public nature.
- Law enforcement bodies, including the Police, Insolvency Services, National Crime Agency and Serious Fraud Office.
- Supervisory as listed within the Money Laundering regulations.
- Any insolvency practitioner based on the definition in section 4 of the Insolvency Act (2000).
Additional new powers
In addition to the above, the Registrar has also been provided with the following additional powers:
- Removal of Documents or Material from the Public Registers: Until recently, the Registrar had very little power to remove material from the public register. The implementation of The Registrar (Annotation, Removal and Disclosure Restrictions) Regulations 2024, which came into force on 4 March 2024 (Regulations), gave the Registrar new powers to remove material from the register if it is inaccurate, incomplete, false or fraudulent. Under the Regulations (which apply to companies and limited liability partnerships), there is a mechanism for affected parties to apply to Companies House to have a material removed from the public register, and if removing such material would have legal consequences, the applicant must explain why their interest outweighs the interest of anyone who may wish to inspect such material. The process of removing the material and the timeframe for objections are set out in the Regulations.
- Analysis: The Registrar is being provided with a new function related to the analysis of information. This includes information that is on the register as well as other information from external sources. The main aim of this function is to ensure that the Registrar can identify information that it holds about which there may be reason to ask questions and assist law enforcement by identifying suspicious behaviours.
- Proper delivery of documents: ECCTA expanded the power of the Registrar to require proper delivery of documents to be made only by persons (on behalf of others or on their own behalf) whose identities have been properly verified. We have previously covered this in our article: ECCTA and Companies House Reforms – The introduction of Identity Verification (IDV), Authorised Corporate Service Provider (ACSP) and Unique Identifiers.
- Registered office addresses: The Registrar was given discretionary power to change the address of a company without an application where the Registrar believes that the address is not an ‘appropriate address’. See our article ECCTA – A Company’s Registered Office Address and the Requirement to Register an Email Address.
How can Michelmores assist?
We can support our clients in complying with the new requirements under the ECCTA as and when the relevant provisions come into force. We also continue to monitor the developments and will publish further updates as and when new measures are announced by the government.
Michelmores has a dedicated Corporate Services team led by specialists in company law and corporate governance. The team will be happy to speak with you if you want to know more about the Registrar’s new powers or generally how the Companies House reforms or ECCTA will affect your company or organisation.
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