UK: Companies House Reform Could See A Clampdown On Erroneous Filings

There've been two seismic shifts in my career: the implementation of the Companies Act 2006 and the introduction of people with significant control regimes. I expect the enactment of the Economic Crime and Corporate Transparency Act 2023 will prove to be a third.

New objectives to be given to Companies House

It may surprise some, but the degree to which Companies House verifies the accuracy of the information it receives is minimal. This is not an accident – the formal name for Companies House is the registrar of companies. As a registrar, if a document is filed that meets basic criteria as to format, authentication and delivery (known as proper delivery) then Companies House is obliged to register it. In contrast, the Economic Crime and Corporate Transparency Act 2023 that was enacted on 26 October 2023 will give Companies House new objectives to promote the integrity of the information it holds.

The new objectives to be given to Companies House include elements that we might expect, such as ensuring that documents are delivered when required and that the information provided is accurate. However, Companies House will also be given the objective of preventing companies from carrying out unlawful activities. This is a significant step closer to making Companies House a general regulator of companies.

New powers give insight into how these objectives will be implemented

It will take time for the necessary regulations, systems, and processes to be put in place and we therefore wait to see how and when these new objectives will be implemented in full. Some changes are clearly prescribed. For example, in future, the identity of directors and people with significant control will need to be verified together with anyone filing on behalf of an entity. However, the new powers that will be given to Companies House also provide some insight into how the objectives will be implemented. For example, once in force, Companies House will be able to request additional information to enable it to determine compliance. Companies House will also be able to reject a document if it is inconsistent with any existing information available to it. Both powers suggest that the Companies House could require filings to be accompanied by supporting evidence in the future.

The new powers give Companies House discretion in certain areas that some may not welcome. As an extreme example, in the future Companies House will have the power to strike off a company if it was registered with information that is misleading or deceptive. We, therefore, wait with keen interest to see if Companies House will publish guidance on how it will decide what information is misleading or deceptive.

What does this mean for my business?

We are tracking the implementation of the Act closely to determine what the reform means for our clients in practice. The Act expects authorised corporate service providers, such as Buzzacott, to play a key role in verifying the identities of directors and people with significant control. We are therefore confident that, with our support, our clients will remain fully compliant with company legislation and that filings will continue to be made correctly and on time.