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The Economic Crime and Corporate Transparency Act 2023

The Government aims to introduce the first set of changes under the new Act on 4 March 2024, following the Economic Crime (Transparency and Enforcement) Act 2022. The Act came into law in 2023 and saw the establishment of a new Companies House register of overseas entities that own real estate in the UK. Some first changes introduced by the Economic Crime and Corporate Transparency Act include:

Identification of individuals

A new identification process has been implemented for those wishing to set up, run, own or control a company or other registered business in the UK, including all directors and people with significant control.  All existing companies, all directors (or equivalent) and PSCs will have a transition period to verify their identity with Companies House, but all individuals will need to have their identity verified before registration.

The requirements will extend to anyone acting on behalf of a company or registered business before they will be allowed to file information with Companies House.

Director Requirements

There will be additional requirements for directors. For example, anyone who is subject to sanctions under the Money Laundering Act 2018 will not be allowed to act as a director of a company or be involved in the promotion, formation, or management of a company without permission from the court. If a director is disqualified under UK legislation, they will automatically cease to hold the position and there will be no protection from liability if they continue to act.

Directors can also be disqualified for repeated non-compliance with companies’ filing obligations or any identification requirements, such as those described above.

New Company Registrations

Registering a company will now require a statement that it is being formed for lawful purposes, and it will need to include a statement that none of the company’s subscribers, officers or persons with significant control are disqualified as directors, or if they are then they have the permission of a court to act in that capacity.

Appropriate Registered Office Address

From 4 March 2024, there will be new requirements for the appropriateness of a company’s registered address, to ensure that documents addressed to the company and delivered by hand or post will be received by someone acting on the behalf of the company and that delivery can be recorded with an acknowledgement of delivery.

A company will not be able to use a PO Box as a registered office address in the future and Companies House has said it will take action against companies that do not have an appropriate registered office address.

The company will also need to maintain an appropriate email address which will also come to the attention of a person acting on behalf of the company with the expectation that documents can be emailed to them.

Shareholder information

Private companies will have to provide the full name of their members on the Companies House register instead of just keeping a register of members themselves. Individuals will be able to apply to have information about themselves hidden from public view and suppress information from historical documents, but there will be limitations to this.

Company Accounts

There will be a transition towards filing accounts by software only.

For smaller companies there will be changes to make filing obligations clearer and to require them to file a profit and loss account and directors’ report instead of abridged accounts or audit exemption claims.

The rules for Limited Partnerships will also change, adding increased reporting requirements for specific information regarding the partners or proposed partners, registered office and identity information for individuals, general nature of the business and email address for contact.  They will also need to file through authorised agents.