Companies House has introduced the set of changes under the Economic Crime and Corporate Transparency Act 2023 (the “Act”) that came into effect on 4 March 2024.
The Act gives Companies House the power to play a more significant role in tackling economic crime and supporting economic growth.
It is important for businesses to take a note of what these changes are and how it will affect them going forward. Failure to comply with the changes
The Act introduced a number of changes which are set out below:
Registered office to be an “appropriate address”
Companies House require companies to, at all times, have an “appropriate address” as their registered office. For an address to be considered an “appropriate address” if:
- A document that is addressed to the company and has been delivered by hand or by post, is to be expected to come to the attention for a person acting on behalf of the company.
- Delivery of documents is able to be recorded by obtaining an acknowledgement of delivery.
These changes mean a company may not use a PO Box as their registered office address. Please be aware, Companies House will take action if a company has a PO Box instead of an “appropriate address”.
Third party addresses may still be used, if they meet the conditions for an appropriate address. Therefore, it is important to make sure to keep updated with what one has set out for their registered office address.
Registrars’ powers
There is a new requirement that a registered email address is provided to Companies House. This will not be public information.
Existing companies will need to give a registered email address to Companies House when they next file their confirmation statement.
Enforcement and sanctions
If a company is issued with a formal request for further information and fails to respond within 14 days, this is a criminal offence and serious consequence may follow, including prosecution, financial penalty or annotation of the company’s record on the register to stop it misleading the public.
Therefore, it is important to ensure that information filed is accurate, contains no omissions and is filed promptly. If a company provides an inappropriate email address, Companies House can give 28 days’ notice to the company to change it.
Statement of lawful purpose
Anyone setting up a company will be required to confirm that they are forming the company for a lawful purpose and will need to confirm its intended future activities are lawful on the annual confirmation statement.
The purpose for this is to stop companies being used for illegal purposes.
Companies House increased powers
Companies House have more power to query and challenge information that appears to be incorrect or inconsistent with the information they hold on the public register. Companies House now has the authority to conduct checks on company names that give misleading information and they have the power to prohibit the use of a company name that could be potentially be used fraudulently or for the purpose of other forms of criminal activity.
On identifying inconsistencies or misleading information, Companies House will issue a formal request for further information. A company has 14 days to respond to such request, and failure to do so will be a criminal offence.
The following changes will be implemented over the next few years and it is important to take note of what Companies House are intending to do:
- Identify verification
- Filing accounts by software only
- Suppression of personal information
- Changes to limited partnerships
- Improving transparency of company ownership
- Investigation, enforcement and data
These stronger checks are intended to improve transparency by making more financial information available to the public.
Following the Act, Companies House has announced an increase to their incorporation and registration fees. It should be noted that from 1st May 2024, Companies House has increased their filing fees.
Overseas Companies registered in the UK
The Economic Crime (Transparency and Enforcement) Act 2022 (the “Act”) introduced a new register, the Register of Overseas Entities (the “Register”), to capture information about beneficial ownership of overseas entities that own UK land. The Act sets out that an overseas entity that owns land, in accordance with the Act, or is proposing to won land in the UK, must register with Companies House.
The Register was introduced to increase further transparency of overseas entities that own UK land. Overseas entities must disclose information about their beneficial owners or managing officers to Companies House. This information is held on the Register and is required to be updated at least once a year.
If an entity has failed to register with Companies House, or failed to comply with updating the Register, restrictions on selling, leasing or raising charges over land will be imposed. Overseas entities cannot purchase any new UK property without a valid registration.
In addition, Companies House have recently updated their guidance on overseas companies registered in the UK. A company must register as an overseas company when it has a degree of physical presence in the UK, such as the place of business or where it carries out its business. A company must file the documents to register their company as a UK establishment within one month of opening the such establishment.
The following documents must be filed:
- a completed form OS IN01 along with the appropriate fee (£71).
- a certified copy of the company’s constitutional documents for example, memorandum, articles of association) with a certified translation in English if the original is in a different language.
- a copy of the company’s latest set out accounts (with a certified translation in English if the original is in a different language).
It is vital that an overseas company registers with Companies House. Companies House have made it clear that non-compliance will be backed up by criminal penalties.
If you wish to discuss any of the above, please contact our Commercial Team below or call us on 01702 338338.
