26 April 2024
The Economic Crime and Corporate Transparency Act 2023 (ECCTA) came into law in October 2023, commencing what is set to be one of the biggest shake-ups of UK company law in recent times.
While the majority of ECCTA is yet to come into force – with the roll out of the most significant changes subject to further legislation and the development of new government systems – some important reforms have already been introduced, most recently on 4 March 2024. We look at the key developments below.
What are the aims of ECCTA?
ECCTA introduces a raft of measures with the combined aims of tackling crime, preventing fraud and boosting enterprise. With regards to UK companies, it seeks to achieve those aims by:
- Expanding the role and powers of Companies House;
- Improving the accuracy of information on the Companies House register;
- Enhancing the transparency of UK corporate entities; and
- Preventing the abuse of personal information.
What are the key changes from 4 March 2024?
On 4 March 2024, the government published a set of regulations implementing ECCTA, known as “Regulation 2”. The regulations introduce five key changes which companies should be aware of
1. Enhanced powers for Companies House
Reflecting ECCTA’s goal of transforming its role from a “passive administrator” of company information to an “active gatekeeper”, Regulation 2 grants the following new powers to Companies House:
- To query and or reject company filings (and to request supporting evidence, where appropriate);
- To amend or remove inaccurate information from the register; and
- To share data with other government departments and law enforcement agencies.
These reforms are underpinned by changes that strengthen the “false statement offences” under the Companies Act 2006, which are designed to prevent the delivery of misleading, false or deceptive information to Companies House.
The combined effect is that all company officers (i.e. directors and company secretaries) will need to take even greater care when making filings at Companies House.
2. Stronger checks on company names
Broadly, Regulation 2 enables Companies House to perform stricter checks on Company names to ensure that they do not facilitate the commission offences involving dishonesty or deception.
Specifically, names which may now be prohibited include those suggestive of a connection with a foreign government or inter-state organisation (for example, the UN), names that provide a misleading indication of a company’s activities, and names containing computer code.
3. Statements of lawful purpose
From 4 March 2024, all subscribers (i.e. the initial shareholders or members of a limited company) will, at incorporation, need to confirm that they wish to form the company for “lawful purposes”. All companies will also be required to confirm every year, as part of its annual confirmation statement, that its intended future activities will be lawful.
4. New rules for registered office addresses
All registered office addresses appearing on the Companies House register, whether for new or existing companies, must now be “appropriate addresses”. An address will an appropriate one if a document addressed to the company and delivered to the address would be expected to come to the attention of a person acting on behalf of the company and the delivery of documents is capable of being recorded. The practical effect of this change is that PO Box addresses will no longer be valid.
Failure to comply will result in significant consequences. Where the company Registrar believes a registered office address is not appropriate, they now have the power to change it to a “default address” held at Companies House. Unless a compliant address is provided within 28 days, the company will be at risk of being struck off.
5. A new requirement for a registered email address
All companies are also now required to provide a “registered email address” through which they can be contacted by Companies House. The address will not be available for public inspection.
As with the new rules for registered office addresses, the registered email address must be “appropriate”, meaning that an email sent to that address would be expected to come to the attention of a person acting on behalf of the company. From 5 March 2024, all companies will be asked to provide a registered email address when filing their confirmation statement.
Further change ahead
As ECCTA is rolled out over the coming months, we will continue to provide commentary on the key changes and what they mean for you – including coverage of what are likely to be the most thorny reforms surrounding identify verification, statutory registers and corporate directors.
Should you require specific and or tailored advice in order to stay ahead of the curve, please contact enquiries@blasermills.co.uk to speak to one of our lawyers.
This article is not intended to constitute legal advice and you should not take, or refrain from taking, any action based on the information which it contains. Always seek the services of a professional legal adviser.