Introduction
On September 22, 2022, a pivotal piece of legislation, the Economic Crime and Corporate Transparency Bill, was unveiled, promising substantial changes to the way Companies House operates in the United Kingdom. The government's intention behind these proposed reforms is to enhance the reliability of data at Companies House, ultimately curbing money laundering and fraudulent activities within the corporate sector. In this blog, we'll delve into the key aspects of the bill, its timeline, and what it means for businesses and individuals alike.
When Will It Happen?
As of now, the bill is in its final stages of amendment, with a further reading scheduled at the House of Lords on October 18, 2023. Once approved, it is expected to receive royal assent later this year, after which the reforms will be gradually implemented. The exact timeline for the enforcement of various sections of the bill is still uncertain.
Understanding the Reforms
Identity Verification
One of the most significant changes proposed by the bill is the requirement for identity verification for several key individuals and entities. These include:
All new and existing directors of companies, members of limited liability partnerships, and general partners of limited partnerships.
Persons with significant control (PSCs).
Relevant officers of registrable relevant legal entities (RLEs).
All individuals responsible for filing documents at Companies House on behalf of an entity.
Verification of identities can be done either by the individuals themselves or through an authorized corporate service provider (ACSP), which may be a law firm or an accountant registered with a supervisory body. Even individual ACSPs will need their identities verified to file at Companies House.
Once the bill receives royal assent, all new entities will require relevant individuals to verify their identities during the incorporation process.
Existing directors are expected to verify their identities when submitting the company's first confirmation statement following the bill's implementation. Secondary legislation is likely to provide a transitional period for identity verification of existing PSCs and RLEs.
Non-compliance with identity verification can lead to legal offenses, not only for the individual but also for the relevant company and its officers who fail to meet this requirement.
2. Accounts
The bill introduces the digital submission of all company accounts to Companies House, with the requirement to tag financial data using standard labels (iXBRL). Small companies will need to file audited annual accounts unless they qualify for an audit exemption. Micro-entities must file accounts that include a balance sheet and profit and loss statement and can choose to file a director's report.
Small companies will no longer be allowed to file abridged or filleted accounts.
3. Registered Office and Email Address
Companies are expected to have a registered office at an appropriate address where documents can be received and delivery acknowledgments recorded. Additionally, companies must maintain an appropriate email address with Companies House, although this information will not be available for public inspection.
4. Statutory Registers
The bill eliminates the requirement for companies to maintain various internal registers, including the register of directors, register of directors' residential addresses, register of secretaries, and the PSC register. However, companies will still be required to maintain a register of members.
What's Next?
As the bill progresses, it's crucial for directors and business owners to be aware of these proposed changes. To prepare for the bill's eventual passage into law, it's advisable to consult legal advisers for impact assessments and guidance on compliance.
Directors should also keep in mind that incorporation and filing for companies will no longer be possible without a verified identity. Whether this verification is handled by an ACSP or the director themselves, it will be a comprehensive process, involving the submission of identification documents to Companies House.
In conclusion, the Economic Crime and Corporate Transparency Bill is set to usher in a new era of transparency and accountability in the corporate world. These reforms aim to protect against economic crimes, making the business landscape more secure and reliable for everyone involved. Stay informed and stay prepared for the changes that lie ahead.
Comments