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Change is coming…

Henry Catchpole talks you through potential changes to Companies House that will affect the UK’s accountants.

With its Corporate Transparency and Registry Reform consultation now completed, the Government is looking to make significant changes as to how Companies House operates in maintaining the UK’s register of companies. So what are the implications of these developments?

In summary, the main changes are:

  • Compulsory identification of directors, members of limited liability partnerships (LLPs), Persons with Significant Control (PSCs) and those filing documents at Companies House.
  • Giving Companies House more powers to question and reject company submissions, including accounts, and improve the accuracy of information held.
  • Making it easier for people to have personal information, including signatures, full dates of birth and home addresses, removed from the register.
  • Cross-checking of information held with other government agencies and requiring AML-regulated firms to report discrepancies on the public register to reduce the potential misuse of companies.

Identification of key people

Under the planned reforms, the identities of those who control registered companies will need to be verified so that people have confidence about who they are dealing with. It will also assist in tracing anyone committing fraud and money laundering. The following will all need their identity verified:

  • Directors of UK registered companies.
  • Designated members of LLPs.
  • General partners of limited partnerships (LPs).
  • PSCs.

Directors, LLP members and LP general partners will be required to have their identity verified before their appointment is valid, including on incorporations. Any appointment without identity verification to the satisfaction of Companies House will be invalid. The company and the officer will also potentially be subject to sanctions.

While the verification of the identity of PSCs is also to be compulsory, this will only be undertaken after the person has become a PSC. It is proposed that this legal requirement will fall on the PSC, not the company.

Verification process

Verification will either be carried out by Companies House, usually electronically, or by agents acting for the company or, for incorporations, the subscribers. Where agents are doing the checks Companies House will require that:

  • the identity of the agent has been verified by Companies House.
  • the agent is regulated by a relevant UK AML regulator.
  • details of the identity checks carried out are confirmed to Companies House.

In addition, anyone making a submission to Companies House on behalf of a company (‘a presenter’) will need to have their identity verified.

Enhanced powers

Currently Companies House only has limited powers to question, reject or remove identified factual errors in company submissions. Instead, a court order is often required to correct filings made in error, which is costly and time consuming for the company.

The information held on the public register for some companies may be wrong or unclear as a result of incorrect submissions. To tackle this, the Government plans to give Companies House greater powers to question and reject company submissions, including accounts and company formations, and amend or remove information submitted where it is found to be inaccurate.

Protecting personal information

The Government plans to make it easier for people to have personal information removed from the public register, including signatures, residential addresses, former names following a change of gender and directors’ occupations.

Reducing misuse of corporate identities

The Government is concerned that there are instances where the information held at Companies House is being used to assist in the misuse of a corporate entity. As well as enhancing AML requirements, there are plans to improve data sharing across Government departments, allow Companies House to apply to the courts to strike off limited partnerships and give the Registrar an enhanced power to query and reject company names where they are too similar to existing company names, trading names or registered trademarks.

Finalised rules

The Government issued a further three consultations in December 2020. These covered:

The changes described are currently only proposals, subject to further consideration and consultation. It is planned that the finalised rules will come into force sometime in 2023-2025, as detailed in Companies House’s five-year strategy document.

• Henry Catchpole, CEO, Inform Direct

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