Historically, Companies House has been a reasonably passive institution receiving regular information from companies (and directors) which are placed into the public domain. The introduction of the Economic Crime and Corporate Transparency Act 2023 (ECCTA) has prompted the most significant change at Companies House in its 180-year history. Rather than a passive recipient of information, Companies House will now take a more proactive approach to registering companies and the scrutiny of information.
While several changes will be made to Companies House, these will be phased in starting from the latter part of the 2023/24 tax year. So, what does this mean for your obligations as a company director, and what additional information do you need to supply?
Initial changes at Companies House
The first changes to Companies House were actioned on 4 March 2024, creating a range of additional powers and an obligation to promote and maintain the integrity of the registers it maintains. As a consequence, Companies House is now able to:-
- Reject any new filings which appear inconsistent with information already held by Companies House
- Request additional information to satisfy any queries about new filings or information already held on the register
- Actively pursue the resolution of apparent inconsistencies
- Remove any non-compliant material from Companies House registers
It’s important to note that while the power to request additional information is essential to the integrity of information held at Companies House, this will be used with discretion. In what is being described as a “risk-based approach”, the initial focus will be on the most significant risks to the integrity of information held within Companies House.
While the use of this power may be expanded in the future, the initial focus is on ensuring the accuracy and integrity of current information and future filings.
Additional obligations at Companies House
As a consequence of the regulatory expansion, several changes to company details, activities, etc., have been introduced, which are listed below.
Office and contact details
The company must:-
- Provide a registered email address to Companies House, which is actively monitored
- Use an active registered office address which is connected to the company’s activities
- Refrain from using a PO Box as their registered office address
Under the new powers, if the address at Companies House is not deemed appropriate, the company can be required to make a change.
Company activities
As a legal requirement, directors of the company must:-
- Provide an annual confirmation statement that all company activities are lawful
- Complete a similar statement during the application process for new companies
Company names
When it comes to company names, the historic regulations have been strengthened, and it is now illegal to:-
- Use company names which contain computer code
- Give the false impression of connection with a government/international organisation
- Attempt to deceive or give a dishonest impression of the company
Directors and disqualification
Adjustments to the Company Directors Disqualification Act 1986 have been made in an attempt to prevent disqualified directors from holding office with any companies. In addition to ceasing to hold office and having any future appointments voided, directors can also be disqualified under UK sanctions legislation.
Limited liability partnerships
The new legislation brings limited liability partnerships under the same umbrella as limited companies, with members now obliged to provide:-
- Email addresses
- Registered office details
- Lawful purpose statements
Amid the ongoing changes, it’s important to recognise that the legal distinctions between for example, limited companies and limited liability partnerships will still remain.
Filing changes
Under the new legislation, small companies and micro-entities will normally be required to prepare annual accounts which fulfil their obligations under Section 396 of the Companies Act 2006. Going forward:-
- Filings will require a profit and loss account and directors’ report
- Micro-entities will still have the option not to prepare a directors’ report
- The option of filing abridged accounts has been removed
- Future returns must include an eligibility statement where companies claim exemption from an audit
- All relevant documentation must be delivered as one package for the filing of accounts
In line with the switch to digital reporting, company accounts will now need to be filed digitally in iXBRL form together with the relevant tag.
Future changes
As discussed above, the actioned and future changes planned for Companies House represent the most significant reorganisation in its 180-year history. Going forward, the changes will impact several different areas, such as:-
Accuracy and value of reported information
- Changes to how information is reported
- A greater focus on shareholder information
- New identification requirements
- An update on procedures regarding the use of agents
Enhanced powers of the registrar
- A more proactive approach to information queries and checking
- A legal right to share data with relevant parties
- Improved privacy protection for directors
While we have a broad direction for future legislation, it will be interesting to see the details and dramatic changes in Companies House’s look and power today and in the future.
Is this a long overdue update to Companies House powers?
Companies House’s role is changing dramatically from a passive recipient of company information to a proactive body with significantly enhanced powers. It makes perfect sense to have as much information collected centrally as possible and greater powers to ensure accuracy and accountability.
In time, these powers will also be extended into other areas, such as obliging companies to collect more information about their customers and alerting the authorities to potential issues. In effect, empowering (or obliging?) directors to be more proactive about whom they are dealing with, and who controls the company, extends the legal reach of Companies House.
Summary
Many will be surprised to learn that this is the first major reorganisation of Companies House in its nearly 200-year history. This organisation, which is central to the registration and reporting of limited companies, partnerships, and other business bodies, has been relatively passive in the past. However, this is all changing!
While several of these legislative adjustments are administrative, we have seen an expansion of the filing obligations for various parties. Interestingly, while the focus of the changes has been predominantly on enhanced powers and more information, company directors will also have additional privacy rights.
If you have any questions or queries about the changes, please contact us, and we can discuss your situation in more detail.