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We reported in November of last year regarding the new Economic Crime and Corporate Transparency Act (ECCTA) which introduced significant changes to UK company law and fundamentally reformed the role and powers of the Registrar of Companies (available here).
As mentioned in our previous report, some of the reforms will not be immediately introduced as they will require system development changes and secondary legislation. The first set of the proposed changes and the relevant draft regulations were recently announced by the government which we summarise below:
Registered Office Address, Registered Email Address, Confirmation Statements and Improving Quality of Data at Companies House – changes from 4 March 2024:
- All companies will need to supply a registered email address which Companies House will use to communicate with the company; it will not be available to the public. New companies will need to give a registered email address when they incorporate, whilst existing companies will need to give a registered email address when they file their next confirmation statement, with a statement date from 5 March 2024 onwards.
- There will be new rules for registered office addresses, meaning companies must have an appropriate address at all times (a PO Box address will no longer be acceptable); Companies House will take action against companies that do not have an appropriate registered office address.
- Companies will need to confirm on their annual confirmation statements that their future activities will be lawful; this will apply to all confirmation statements with a statement date from 5 March 2024. When incorporating new companies, confirmation that the company is being formed for a lawful purpose will also be required.
- Companies House will have broader powers to oversee company creation and ensure more reliable data; this will include more power to check, remove or decline information that seems incorrect or inconsistent with the information already on the register.
Companies House fees increasing from 1 May 2024:
On 19 February 2024, the Registrar of Companies (Fees) (Amendment) Regulations 2024 and the Registrar of Companies (Fees) (Register of Overseas Entities) Regulations 2024 (together the Fees Amendment Regulations) were published and laid before Parliament. The Fees Amendment Regulations amend existing Companies House fees, as well as introducing new fees to reflect amendments made to the Companies Act 2006 (CA 2006). The Fees Amendment Regulations will come into force on 1 May 2024.
In view of the above, Companies House announced they are increasing their fees from 1 May 2024 and published a list of all new Companies House fees.
In their blog published in July last year ‘Reviewing Companies House fees‘, the Registrar explained that their fees cover the cost of the services they deliver and Companies House does not make a profit on their fees. Further, Companies House said that their fees are much lower than the global average (which have not changed since 2016) and many believe their fees are too low.
Reviews from professionals in certain sectors were mainly positive and some commenting that the increases were justified given the additional responsibilities and new powers provided to the Registrar which will ultimately enable Companies House to deliver a better service and allow access to accurate information on the register.
Companies House to be given power to issue financial penalties
On 19 February 2024, the Economic Crime and Corporate Transparency Act 2023 (Financial Penalty) Regulations 2024 (Financial Penalty Regulations) were published. The Financial Penalty Regulations will introduce the new civil penalties regime under the ECCTA. This means that Companies House will be given power to impose financial penalties on a person for offences under the CA 2006 instead of bringing criminal proceedings against that person.
Companies House will have discretion as to pursue a financial penalty (maximum fine not exceeding £10,000) or pass to law enforcement to consider criminal sanctions.
If the Financial Penalty Regulations are made on or before 1 May 2024, they will come into force on 2 May 2024. If they are made after 1 May 2024, they will come into force on the day they are made.
Company and Business Names/Objections to a Company’s Registered Name
On 20 February 2024, the government announced that it is introducing new laws which will affect the Company Names Tribunal – Notice: Changes to Companies Act 2006 which impact the Company Names Tribunal (Notice).
The ECCTA includes a package of reforms to strengthen the company and business names regime under the CA 2006. There will be amendments to section 69 of CA 2006 to expand the Registrar’s control over names as follows:
- section 69(1)(b) of CA 2006 is being amended so that an applicant can object to the respondent’s use of a challenged named in any jurisdiction (i.e. not only the use of that name in the United Kingdom) which would likely mislead members of the public in that jurisdiction;
- section 69(3) of CA 2006 is being amended to allow members or directors (at the time the challenged name was registered) to be joined as respondents with the company;
- section 69(4)(b) of CA 2006 is being repealed in its entirety so that a defendant will no longer be able to defend the challenge against a registered company name on the basis that the company (i) is operating under the name, or (ii) is proposing to do so and has incurred substantial start-up costs in preparation, or (iii) was formerly operated under the name and is now dormant.
There are no related transitional provisions under the ECCTA for the above changes, particularly, there is no provision for the repealed law to continue to apply in certain cases. The government aims to introduce this change on 4 March 2024, but this is subject to Parliamentary timetables. The Tribunal will publish the implementation date via an update to the Notice as soon as it is confirmed.
Conclusion
It would seem from the announcements and draft regulations published this February alone, the government and Companies House are moving swiftly to introduce the sweeping reforms of the ECCTA. We are monitoring the developments and will publish further updates as and when new measures are announced by the government. Companies House also has a dedicated website in relation to the reforms, where it will be sharing further updates in due course: https://changestoukcompanylaw.campaign.gov.uk/.
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 changes introduced by the ECCTA and how this will affect your business. Corporate Services | Michelmores
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