By Jessica Holman, Associate Director
The UK Economic Crime and Corporate Transparency Act (2023) aims to improve corporate transparency and enhance the role of UK Companies House in combatting economic crime. This will be the biggest change to Companies House since company registrations were introduced in 1844.
The legislation will introduce significant reforms to ensure the accuracy and reliability of information on the register to support national security and economic growth. UK Companies House will undergo a phased transition to implement the Act’s provisions. The transition plan includes ensuring the proper delivery of documents to the registrar. It will also aim to ensure that the information in the register is accurate, and correct records are held (so that records are not misleading to the public). In addition, it aims to prevent companies or others conducting unlawful activities.
This entails more rigorous examination of company filings and strengthened verification procedures. Greater transparency will be achieved by publishing more information about company directors, people with significant control (PSCs) and those who file information on behalf of companies. The Act will be introduced in phases over the years ahead, with more responsibilities placed on affiliated individuals and authorised corporate service providers.
A cornerstone of these reforms is identity verification, requiring substantial system developments to accommodate over 7 million individuals who will participate in these checks. The first phase will begin on 25 February 2025, with the launch of the Authorised Corporate Service Provider (ACSP) program. Trust and Company Service Providers and other UK-supervised professional service providers (such as accountants and solicitors) registered for Anti-Money Laundering with a supervisor in the UK, will be eligible to become ACSPs. This authorization will enable them to conduct identity verification for their clients and submit the information to the registrars.
By autumn 2025, identity verification will be mandatory for all directors and PSCs of newly incorporated companies at the time of incorporation. Existing companies will have a 12-month transition period to verify the identities of their directors and PSCs. Reforms for limited partnerships which will enhance their accessibility, and transparency will be implemented from spring 2026. Shareholder information will also be published to further improve transparency of company ownership. This may require considerable work for some companies to introduce these reforms, therefore, different implementation options are being considered.
Long term plans also include the submission of accounts by software, only allowing UK corporate entities with legal personality to act as a corporate director and ensuring that Companies House can start compliance enforcement against individuals who have not been able to verify their identity. Furthermore, the Act intends to enable greater communication and the substantiation of information between Companies Houe and public and private bodies.
The Act aims to empower Companies House to take a leading role in the fight against economic crime while simultaneously fostering economic growth. These measures will, over time, hopefully enhance transparency, accuracy, and trust in the UK’s corporate records.
