Economic Crime and Corporate Transparency Act 2023

The Economic Crime and Corporate Transparency Act 2023 (ECCTA) received Royal Assent on 26 October 2023 and brings in a suite of changes which are intended to prevent abuse of UK corporate structures and reduce economic crime. The ECCTA will come into force in stages and the following reforms are due to take effect from 4 March 2024 (although this date is dependent on parliamentary timetables):

• Greater powers for Companies House to query information
     
  Companies House will be able to scrutinise and reject information that seems incorrect or inconsistent with information already on the register. In some cases, Companies House will be able to clean up the register and remove inaccurate information using data matching.
      
  Companies House has confirmed it will take a more robust approach to dealing with information that is provided to it both before and after it is accepted and published on the register. In addition, it will also be able to query information that was already on the register before these measures came into effect. A ‘query’ will start with a request for more information and supporting evidence. For example, it could ask more questions about a share capital figure that seems too high or the age of a director that seems unusual.
      
  Once Companies House identifies false, misleading or incorrect information, it will be able to remove it more quickly than it can at the moment. The hope is that this may avoid the need for companies to apply for court orders to remove duplicated or erroneous material.
    
  If Companies House asks a company for more information it will need to respond quickly. If the case escalates to a formal query for information and a company still does not respond, this will be a criminal offence and the consequences could include a financial penalty or prosecution. Companies House has confirmed it will give a company 14 days to respond to a formal query.  
    
• Stronger checks on company names
       
  Companies House will have power to prohibit names (current or proposed) which could be used to facilitate crime (eg names which suggest a non-existent connection to a foreign government or institution, or where names include computer code).
      
• New rules for registered office addresses
        
  • PO boxes will no longer be permitted.
     
  • An ‘appropriate address’ must be provided (ie one where a delivery can be acknowledged and come to the attention of a person acting on behalf of the company).
      
    If a company’s registered office is not an ‘appropriate address’ then Companies House will have the power to change it to a default address.
      
• Registered email addresses
     
  All companies must provide an ‘appropriate email address’ for communications with Companies House. This email address will not go on the public register, it will just be a means for Companies House to communicate with companies. The email address will be an ‘appropriate email address’ if emails sent to it by Companies House would be expected to come to the attention of a person acting on behalf of the company. 
     
  At present, it is intended that companies incorporated on or after 4 March 2024 will be required to supply an appropriate email address on incorporation and existing companies will provide it with their first confirmation statement that is due after 4 March 2024.  
    
• Lawful purpose statement
     
  • On incorporation all companies will be required to confirm that they are forming the company for a lawful purpose.
      
  • Every year a company will need to confirm in its confirmation statement that its future activities will be lawful.  
        
• Annotations to the register
     
  Companies House will be able to annotate the register to let users know about potential issues with the information that has been supplied.
      
• Sharing data
    
  Companies House will have new powers to share data with law enforcement agencies and other government departments.

The reforms outlined above are only some of the changes being brought in by the ECCTA over the next few months.  We will provide further updates on the proposed changes (such as identity verification of directors, people with significant control and members of LLPs) once more information is released.