On 12 August 2024, Companies House published their business plan for April 2024 to March 2025, which sets out the stages of implementing the ECCTA 2023 and the planned reforms which we previously reported in our article ECCTA – Update on the Companies House Reforms and Draft Regulations.
Interestingly, the report stated that more than five million limited companies are registered in the UK, and around 500,000 companies are incorporated annually. Currently, over 30,000 overseas entities are registered at Companies House since the introduction of the Register of Overseas Entities (ROE) in August 2022. The report gave additional insight into some staggering stats: 14 million transactions per year are processed digitally; 4.3 million advanced searches of the registers are made every year, and according to research commissioned and published in 2019, the estimated value of the register to the UK economy reported to be worth over £1 to 3 billion every year. Based on these astounding numbers, it is unsurprising that criminals have targeted UK companies to commit fraud, money laundering and other forms of economic crime, which was acknowledged in the report by Louise Smythe, the Chief Executive and Registrar of Companies for England and Wales. The new enhanced powers of the Registrar of Companies (Registrar) meant that they are now better equipped to prevent further abuse of the register and play an even better role in the UK government’s approach to preventing economic crime.
Some of the ECCTA 2023 implementation stages and planned reforms for the said period are highlighted below:
- The introduction of a registration process for third-party agents to become authorised corporate service providers (ACSPs). Companies House will build the systems and methods for onboarding ACSPs and undertake ongoing compliance, monitoring, and enforcement, which will be linked to the Anti-Money Laundering (AML) rules. Only ACSPs will be authorised and recognised to transact with Companies House on behalf of a registered company.
- Identity verification (IDV) will become mandatory for anyone setting up, running, owning, or controlling a company in the UK and those who file for companies. Companies House is developing significant changes to its systems and service integrations, which are required to release the IDV initiative. By the end of March 2025, the Registrar will have introduced the technical capability to verify an individual’s identity. A transition process for a phased rollout will begin in Spring 2025 and beyond.
- The Registrar started the development of process changes to impose limits on the use of corporate directors, subject to certain exemptions, as set out under the Small Business Enterprise and Employment Act 2015.
- The Registrar will develop processes to enable the suppression of personal information from the register, including suppression of the company’s registered office address if it is a person’s residential address and allow people who are personally at risk to apply for protection of their information.
- Companies House will develop a process for intelligence assessment with strategic partners to identify and assess threats posed to the UK through misuse of corporate structures. They will also continually develop their understanding of how third-party agents can be used to hide the identities of those seeking to abuse Companies House’s processes and identify the ways in which criminals obscure the true control of registered companies.
- They are also developing services that will enable Limited Partnership (LP) reforms, which will bring the legal requirements for LPs in line with the requirements for limited companies. This will include the need for IDV, increased data transparency, and the Registrar’s invoking new powers to remove dormant partnerships or LPs.
- There will be continued scrutiny of the information on ROE. The Registrar will work with the UK Land Registry to identify individuals who failed to comply with their obligations under the ROE rules. Companies House will actively follow up on information supplied and not updated and use their querying powers to maintain and improve the accuracy of the ROE information, targeting individuals who attempt to avoid transparency.
- The Registrar will focus on continuing the development and rollout of new services as they implement the changes brought about by the ECCTA 2023, which include optimising their existing infrastructure to ensure that they have reliable, secure and cost-effective services. They have highlighted their plans to achieve a digital infrastructure that is fit for the future, leveraging new technologies, including artificial intelligence or AI.
How can Michelmores assist?
It is our intention to become an ACSP so we will be able to support our clients in complying with the new requirements under the ECCTA 2023 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 experts in the field of company law compliance and corporate governance. The team will be happy to speak with you if you want to know more about the IDV requirements, ACSPs or generally how the Companies House reforms or ECCTA 2023 will affect your company or organisation.
