Companies House, the ECCTA 2023 and new criminal sanctions

In what is being described by Companies House CEO Louise Smyth as “the most significant change for Companies House in our 180-year history”, Monday 4 March 2024 saw the first measures under the Economic Crime and Corporate Transparency Act 2023 (ECCTA 2023) come into force.

The ECCTA 2023 introduces robust new laws to fight corruption, money laundering and fraud, and consequently boost confidence in the UK economy. Significantly, Registrars of Companies for England, Wales, Scotland and Northern Ireland now have a duty to promote new statutory objectives when performing their functions, including an objective to prevent companies from carrying out unlawful activities or facilitating others to carry out unlawful activities.

A priority is to crackdown on the misuse of the companies register, and make it quicker and easier to report and remove personal information that has been misused. Other new powers, such as identity verification and accounts reform, will be gradually phased in to minimise disruption for legitimate businesses.

Changes

The changes introduced so far include:

• greater power to scrutinise, challenge and reject information received (for example, by requesting supporting evidence) on incorporation and retrospectively;
• more stringent checks on company names;
• stricter rules for registered office addresses (for example, it will no longer be possible for a company to list a PO Box as their registered office address);
• a requirement for all companies to provide an appropriate email address;
• a requirement for subscribers to confirm that they are forming a company for a lawful purpose on incorporation;
• a requirement for a company to confirm its intended future activities will be lawful on its confirmation statement;
• greater power to remove factually inaccurate or misleading information; and
• the ability to share data with other government departments and law enforcement agencies, such as the police and the Serious Fraud Office.

Underlining these changes is a marked increase in enforcement powers and the introduction of new criminal offences.

Enforcement and updated criminal offences

The ECCTA 2023 introduces new criminal offences and expands and/or amends many existing requirements and sanctions.

For example, prior to the ECCTA 2023 coming into force, if a company was in default of its obligation to keep up to date a register of members (pursuant to Section 113 of the Companies Act 2006) then it (and every company officer in default) may be liable on summary conviction to a fine not exceeding level 3 (ie, £1,000). Since the ECCTA 2023 has come into force, the duties under Section 113 of the Companies Act have been expanded so that, among other things, any new member of a company is now required to provide certain, more detailed, information to the company, and within a time limit. Should a person, ‘without reasonable excuse’, fail to comply with these requirements, they may be found guilty of an offence and conviction on indictment, face imprisonment for a term of up to 2 years and a fine. If a company commits an offence, it is also committed by every officer of the firm in default.