Strong corporate transparency is of crucial importance to those undertaking due diligence exercises and making acquisition decisions. Information held by Companies House should be up to date and reliable to ensure these decisions can be made with confidence and certainty.
The Economic Crime and Corporate Transparency Act 2023 (‘the Act’), once fully implemented, will make substantial changes to the role of Companies House and its interactions with companies and LLPs. Notably, Companies House will transition from primarily a registrar to a regulatory body, equipped with new powers to fulfill this role. The aim is to improve transparency and provide more accurate and trustworthy registers.
Given the substantial scope of these changes, they are being implemented gradually over an extended period, with the first changes introduced in March 2024. Further implementation will depend on the availability of Parliamentary time in both Houses and will be regularly monitored, with additional changes anticipated throughout 2025 and 2026.
The Registrar’s new objectives
The Act sets out four new objectives (the ‘Objectives’) for the Registrar of Companies (the ‘Registrar’):
- to ensure that any person required to deliver documents to the Registrar does so, and that the requirements relating to proper delivery are complied with;
- to ensure that the register is accurate and contains everything it ought to contain;
- to ensure that records kept by the Registrar do not create a false or misleading impression to members of the public; and
- to prevent companies and others from carrying out unlawful activities or facilitating others doing so.
The Objectives informed the changes under the Act, and the Registrar, when exercising its powers, will have these in mind.
What are the changes?
The first set of changes, introduced in March 2024, aim to ensure the accuracy of both existing and newly submitted information. To achieve this, the Registrar will be able to:
- query and remove information already on the register and request verification evidence for any new filings;
- remove false information from the register; and
- query and reject company names that seek to mislead the public, facilitate fraud, or give the false impression that the company is connected to a foreign government.
Further changes are expected to become law in the autumn of 2025. These include:
- compulsory identity verification for new directors and persons with significant control (‘PSCs’); and
- existing directors and PSCs will be required to verify their identity within a 12-month transition period (this will be conducted through the annual confirmation statement filing).
Additional changes expected in the spring of 2026 include:
- making identity verification mandatory for presenters when filing any document; and
- requiring third-party agents filing on behalf of companies to register as an Authorised Corporate Service Provider (‘ACSP’).
Looking forward
If companies receive a request for further information from the Registrar, it is important these are complied with within the 14-day period. Failure to do so may constitute an offence and result in financial penalties.
There are understandable concerns over the cost and administrative burden associated with complying with identity verification requirements. However, Companies House has stated that there will be a range of services to support throughout the process. Identification can be verified directly with Companies House or via an ACSP. From 25 February 2025, Trust Company Service Providers and professional service advisers registered for Anti-Money Laundering under supervision in the UK will be able to register as an ACSP and provide verification services for their clients. This offers companies an alternative to reduce the administrative burden.
Directors must stay alert to these changes and their implications. If you need help understanding them or ensuring compliance, we are available to assist. We encourage all companies to regularly review their compliance, especially ahead of any anticipated corporate transactions.
