From 4th March 2024 onward a series of major changes to Companies House and UK company law will be rolled out as part of the new Economic Crime and Corporate Transparency Act 2023, which gained Royal Assent on 26th October 2023. The aim of the changes is to encourage greater transparency, support economic growth and tackle economic crime. In this article we will set out the main changes to Company law, which will come into force on 4th March 2024.
Why is Company law in the UK being changed?
One of the primary aims of the new Economic Crime and Corporate Transparency Act 2023 (the 2023 act) is to increase greatly the accuracy and quality of the data held by Companies House. This will help tackle economic crime and drive greater levels of confidence in the UK economy.
The 2023 act brings in a set of new statutory objectives for Companies House while providing the registrar with a range of new and enhanced powers. The new measures include:
- The introduction of identity verification for all new and existing registered company directors, people with significant control (PSCs) and those who file on behalf of companies.
- Widening their powers to become a more active gatekeeper over company creation and more reliable data.
- Fostering more reliable and accurate financial information on the register, which reflects the latest advancements in digital technology and enables better business decisions.
- Giving Companies House more effective enforcement powers, increasing their ability to share relevant information with partners.
- Enhancing the protection of personal information to protect individuals from fraud and other kinds of harm.
Change 1: Registered Office Addresses
From 4th March 2024 all limited companies, limited liability partnerships (LLPs), limited partnerships (LPs) and Scottish limited partnerships (SLPs) registered in the UK must use an “appropriate address” as their registered office address.
An address is “appropriate” only if:
- A document addressed to the company and delivered to that address by hand or by post would be expected to come to the attention of a person acting on behalf of the company.
- The delivery of documents to that address is capable of being recorded by the obtaining of an acknowledgement of delivery.
The important point to bear in mind is that, from 4th March 2024, you may no longer use a PO Box as your registered office address. Companies House have stated that, where a company is found to be using a registered address that is inappropriate, they will take action under their regulatory powers.
If Companies House believe that your company’s registered office is inappropriate then they will change it to a default Companies House address. If this happens then you will need to provide within 28 days a new appropriate address with evidence of proprietary ownership or other right to use it e.g. a lease that the company has for that address or else proof that it is third-party address provided by an Authorised Corporate Service Provider. If you fail to do this within 28 days, however, then Companies House may begin the process of dissolving your company i.e. striking it off the register.
If you are already using a third-party address, however, such as that provided by Uniwide’s registered address service, then you will continue to meet the criteria for a registered company address and you need take no further action.
Change 2: Statement of lawful purpose
From 4th March 2024, anyone registering or incorporating a new company must provide a statement confirming that they are forming the company for a lawful purpose. From 5th March 2024 it will also be necessary to file an annual Confirmation Statement to reaffirm that the future activities of the company will be lawful.
The aim of making these statements is to place the onus on those responsible for the running of companies on the register to ensure they are run in a lawful way.
Change 3: Confirmation Statement – Registered e-mail address requirement
Registered companies will need to provide an “appropriate” registered e-mail address to Companies House. An e-mail address is considered appropriate if, in the ordinary course of events, e-mails sent from Companies House would be expected to come to the attention of someone acting on behalf of the company. Your registered e-mail address can be provided when you register your company or when you next complete and file your company’s Confirmation Statement.
Your company’s registered e-mail address will not be placed on the public register of companies: It will be used by Companies House only for communicating with you.
Change 4: Abolition of company registers
Companies will no longer be required to keep their own:
- Register of directors.
- Register of directors’ usual residential addresses.
- Register of company secretaries.
- Register of people with significant control (PSC register).
Despite the above, however, companies must still accurately maintain the information held in these registers by Companies House. The date for the implementation of this change will depend upon when the relevant law is passed.
Change 5: Introduction of software-only filing of annual accounts
Over the next two years Companies House will be phasing out the filing of annual accounts through WebFiling, the “Find and Update Company Information” service, joint filing service with HMRC and paper filing. Instead, all annual accounts will need to be filed through approved software.
As Companies House explains, “We’ll soon be transitioning towards filing accounts by software only. This will allow more efficient and secure filings for companies, and will improve the quality of the data on the register. Software-only accounts filing will create a single, cost-effective, sustainable and traceable way to file”.
Although this is not an immediate change, companies who are not yet using approved software may wish to consider looking at new software for filing their annual accounts in future. For more details on software-only filing of annual accounts, please see the Companies House website (Changes to accounts, part 1: moving to software-only filing).
Change 6: Changes to small company accounts filing options
Over the next two to three years a series of changes are being made to how small companies and micro-entities undertake their filing process, as follows:
- The option for abridged accounts and paper filing will be removed.
- All small companies and micro-entities will be required to file their profit and loss accounts and a directors’ report when they file their annual accounts with Companies House.
- Giving Companies House the power to require all parts of a filing to be delivered together to facilitate the digital filing of more complex accounts.
- Limiting how many times a company may shorten its Annual Reporting Period.
Change 7: Audit exemption
Over the next two to three years the directors of small companies and micro-entities, dormant companies, parent companies and subsidiaries that are claiming audit exemption will be required to provide an additional statement of their balance sheet. This must (a) identify the exemption for which they are claiming and (b) confirm that the company qualifies for the audit exemption. The exact date of this change is still to be formally announced by Companies House.
Change 8: Identity verification changes
Companies House plans to introduce a new identity verification process to deter those who seek to use UK companies for illegal purposes. The new ID verification process will apply to everyone who sets up, runs, owns or controls any company in the UK. The key points of which to be aware are as follows:
- Directors and people with significant control (PSCs) of new companies will need to complete identity verification.
- Identity verification will apply to more people, including members of a limited liability partnership (LLP).
- For existing companies, all directors and PSCs will have a transition period during which to verify their identity with Companies House.
- Anyone acting on behalf of a company will also need to verify their identity before they can file information with Companies House.
- It will be possible for ID verification to be carried out either directly with Companies House or else through an authorised agent.
There is no date for this proposed change yet. For more details, please see the Government’s Factsheet: identity verification and authorised corporate service providers.
Change 9: Suppression of personal information on historical filings
Under proposed changes to company law, individuals will be allowed to ask that Companies House conceal earlier references to their home addresses, day of birth, business occupation and signatures from historical filings (from before 10 October 2015) on the public register. Applicants will not need to provide any evidence and the suppression of information will be automatic after submission of the application.
Other measures are being introduced which will allow those who are at risk of harm to ask Companies House to hide their name or previous name(s) and sensitive address(es). In certain cases of more serious risk it may even be possible to ask that all other personal details, including service addresses, be hidden from the public register.
Change 10: Changes to limited partnerships
As part of the 2023 act, Companies House intends to make information about limited partnerships (LPs) more accessible and transparent. LPs will be required to:
- Provide partners’ names, dates of birth and usual residential addresses.
- Verify the identity of general partners.
- Provide a registered office within the UK.
- Provide a standard industrial classification (SIC) code.
- File an annual confirmation statement.
- File their information through an authorised agent (also known as an Authorised Corporate Service Provider).
These new changes for LLPs are not immediate: They will be introduced over a period of around six months from when the relevant legislation is passed and implemented.
Change 11: Increased transparency of company ownership
Under the new law, companies will be required to:
- Record in their registers the full names of shareholders who are individuals, or the full names of corporate members and firms where applicable.
- Provide a full list of shareholders so that Companies House can display their information in a more user-friendly way.
In turn, Companies House intends to collect and display more information from companies claiming an exemption from providing details of persons with significant control (PSCs) including the reason for the exemption. They will also collect and display the conditions which allow a relevant legal entity (RLE) to be recorded as a PSC.
Under this set of changes only UK corporate entities with “legal personality” can be appointed as corporate directors. The directors of these corporate directors must be natural persons and will be required to verify their identities.
These changes are not immediate: They will phased in once the law in question has been passed.
Final words
We hope that you have found this guide to the forthcoming changes in company law useful. It is essential to review all of these changes and how these will affect you. Some changes have already been introduced, whereas others will be phased in over the coming months. These changes will require a period of adjustment for many companies in the UK but, in the long term, their benefits should be seen in decreased economic crime and fraud and increased economic growth.
