The Economic Crime and Corporate Transparency Act (ECCTA) passed into law in October 2023.  The Act makes far reaching changes to UK company law which will have a significant impact on the day to day running of companies.   These changes aim to enhance transparency, combat economic crime, and support economic growth. The changes will be implemented by a series of commencement orders over a period of a year or more.

The first set of alterations came into effect on 4 March 2024.

1. Companies House now has enhanced authority to seek additional supporting information relating to the company registrations.

2. Stronger checks on company names with the ability to remove offensive names or those that imply connections with foreign governments or international organisations.

3. All companies must now have an ‘appropriate address’ suitable for service of documents at all times which means anything delivered there will be able to be formally acknowledged and come to the attention of the person acting on behalf of the company.  It can no longer be a PO Box address or an unstaffed address.  Failure to comply can lead to striking off proceedings by Companies House.

4. A registered email address must also now be provided on the incorporation of a new company, whilst existing companies will need to provide an email address on the next Confirmation Statement that is filed aft

5. The shareholders of a newly incorporated company will need to make a statement of lawful purpose, to confirm that the company is being incorporated for a lawful purpose.  Existing companies will be required to make a statement of lawful purpose in the next Confirmation statement that is filed.  The statement will be repeated by the company each year in the Confirmation Statement.

6. Companies House will also have greater powers to share data with other government departments to improve collaboration.  Companies house will also have greater powers to remove factually inaccurate information filed and annotate the register when information seems confusing or misleading.

Other changes are expected as more parts of the ECCTA 2023 come into force over the next 12 months such as:

1. Mandatory ID verification for all directors and PCS’s (existing and newly appointed).  Those who fail will commit a criminal offence and civil penalty.  Companies with unverified directors will commit an offence.

2. A person will be prevented from being a director unless their ID is verified.  There will also be a ban on corporate directors.

3. Restrictions of who can file company information at Companies House to verified individuals and authorised corporate service providers.

4. If foreign companies  registered on the Register of Overseas Companies fail to respond to requests for information from the Registrar, they can be prevented from being able to make dispositions of UK real estate assets.

5. There will also be a new criminal offence of “failure to prevent Fraud”, in which companies and partnerships can be found liable for failing to prevent staff, agents and others committing fraud for the benefit of the company or customers.  This offence would however only apply to large companies of 250 employees or more

If you have any questions about how the ECCTA will affect you or your business, please do not hesitate to contact Nicolle Marchant by email or on 01494 893 514.