Economic Crime and Corporate Transparency Act – Changes to Companies House in March 2024
Changes are incoming at Companies House that will impact not just every company, but the countless agents and advisers who file on their behalf. Kerry Southworth, associate solicitor in our corporate team, details the changes you need to be aware of.
The Economic Crime and Corporate Transparency Act 2023 (ECCT) came into force on 23 October 2023, and despite promising much reform, little has been confirmed up to now in terms of when and how these changes will happen.
However, Companies House have now detailed the first tranche of reforms, to take effect from March 2024.
The changes taking effect from March will be:
Statement of lawful purpose
On incorporation as a new company, the subscribers will need to confirm that the company is being formed for a lawful purpose.
This confirmation will also be included in each annual confirmation statements from March, including for those already incorporated companies, to confirm the activities, and intended future activities are lawful.
Registered office addresses
Each company will, from March 2024, be required to, always, keep their registered office to an “appropriate address”. Such appropriateness will need to be confirmed by an accompanying statement each time a change of the registered office takes place. The ECCT defines an “appropriate address” as one whereby:
- A document addressed to the company, and delivered there by hand or by post, would be expected to come to the attention of a person acting on behalf of the company, and
- The delivery of documents there is capable of being recorded by the obtaining of an acknowledgement of delivery.
If Companies House consider that a company’s registered office is not an appropriate address, they may elect to change it to a default address, held at Companies House. Companies will then have 28 days from such change to provide a new appropriate address, or risk strike off proceedings.
This means that mailboxes or PO Boxes will no longer be permitted as registered office addresses. It is not known whether there will be a transitional period for this to take place, and we would urge any company who currently uses mailboxes or PO Boxes as their registered office to take immediate action.
As a reminder, registered offices are the public address of the company. Many small companies use directors’ residential addresses as their registered office.
However, care must be taken when using residential addresses. This can cause privacy and security concerns, but anyone who allows their address to be used as a registered office should also check any restrictions on their property.
Often residential addresses have restrictive covenants that prevent business use, which may be breached by allocating the address as a registered office. Our property team are on hand to assist should any investigations be required.
Registrar’s powers – enforcement and sanctions
ECCT extends Companies House’s powers to investigate and challenge information that it holds about companies. Currently, false or inaccurate filings are difficult to resolve once filed, and in most cases, a court order is required to rectify any issues.
This can be at great cost to innocent companies who are victim to malicious or erroneous filings and adds delays to information being corrected.
The new powers will give Companies House the ability to reject and, in some cases, remove or annotate certain documents on the register that appear to be incorrect, inconsistent, incomplete, false or fraudulent.
It is expected that such steps will require consultation with the relevant company before action is taken. Failure to respond to a request for information could include:
- A financial penalty
- An annotation on the company’s record
- Prosecution
Further changes
This is only a small number of changes anticipated by ECCT, with many more to come, including identity verification, accounts filing methods and filing fees.
Our corporate team is on hand to help clients throughout this time, and we will report any more changes once we know what is required and a timeframe for implementation.