The Economic Crime and Corporate Transparency Act 2023 (the ‘Act’), which aims to reduce economic crime by providing greater powers to UK authorities, including transforming Companies House by expanding the role and powers of the Registrar, received Royal Assent on 26 October 2023.

The Act is expected to be implemented over the next few years. Companies House will start to introduce changes in 2024 in areas where they can move forward without secondary legislation or system development, which will also allow software vendors time to develop software solutions.

The ‘early measures’ we expect in the new year include:

• the Registrar using greater powers to query and reject information submitted, using data matching to identify and remove inaccurate information from the register, as well as annotating information to let users know about potential issues, all to enhance the accuracy and reliability of the register;
• new requirements for companies to provide both a valid registered office address and a registered email address;
• stronger checks on company names and the requirement for a declaration of lawful purpose on the incorporation of an entity and on annual confirmation statements; and
• the Registrar sharing data with other government agencies and law enforcement bodies to combat economic crime and corporate fraud.

In this article, we take a closer look at the expansion of the role and powers and what key changes companies need to be aware of.

Greater powers

The Act provides the Registrar with powers to query and check information before placing it on the public register, meaning Companies House will no longer be obliged to accept documents automatically, as well as to query information already on the register. These powers stem from the Act’s overarching objectives for the Registrar to promote the integrity of the register, enshrined in the new section 1081A of the Companies Act 2006. These objectives are:

1. To ensure that anyone who is required to deliver a document to the registrar does so (and that the requirements for proper delivery are complied with).
2. To ensure information contained in the register is accurate and that the register contains everything it ought to contain.
3. To ensure that records kept by the registrar do not create a false or misleading impression to members of the public.
4. To prevent companies and others from
   a. carrying out unlawful activities, or
   b. facilitating the carrying out by others of unlawful activities.

Under these objectives, the Act gives the Registrar:

• a new power to require those forming or running companies to supply additional information in relation to material they file at Companies House;
• new powers to share data proactively with any persons for purposes connected with the Registrar’s functions or with other public authorities for purposes connected with their functions;
• increased powers to remove material from the register;
• greater powers to change the address of a company’s registered office and take action against those persistently failing to provide an appropriate registered office address;
• the ability to make rules requiring digital delivery of documents and filings.

Empowering transparency: what are the key changes?

The reforms are a shift towards ensuring greater integrity and credibility in the business landscape. Here's an overview of the key changes to be aware of:

1. Power to query and check information before placing it on the register

Under the new legislation, the Registrar will have the power to reject and query new filings, along with the ability to question information already on the register. This will apply where information is identified as potentially fraudulent, suspicious, or might otherwise impact the integrity of the register.

Where a query is raised pre-registration, the filing will be rejected along with the reason for the rejection. The document may then be re-submitted once the query has been addressed, providing evidence if required.

Where a query is raised post-registration, the recipient will be given a fixed timeframe within which to respond. Non-response or insufficient evidence will result in potential sanctions by the Registrar.

2. Power to query company names

The new powers will enable the Registrar to reject an application for an incorporation or a change of name where:

• the name could be used to facilitate certain crimes;
• the name misleadingly suggests a connection with a foreign government or an international organisation (as defined in the Act); or
• the name comprises or contains computer code.

As it is unrealistic to expect every potential risk to be caught pre-registration, the Act gives the Registrar the power to direct existing entities to change their name, and, in the event of non-compliance, the power to determine and change the entity’s name.

3. Removal of information

The Act gives the Registrar discretionary power to remove material that impacts on the integrity of the register, though as some material has legal consequences when registered it is likely that in these situations it will remain a matter for the courts.

4. Registered office address

Companies will no longer be able to use a PO Box as their registered office address and must always have an appropriate address.

Additionally, the Registrar will now have a discretionary power to change the address of a company when satisfied they are not authorised to use it.

What’s next?

We will be providing further analysis and guidance as the implementation of each section approaches. Please get in touch with Trish Sankey in our Corporate Secretarial team, or your usual RSM contact, if you have any questions.