Changes to UK Company Law: What You Need to Know
Changes to UK Company Law

Share this:

Facebook
Twitter
LinkedIn
Print

On 4th March 2024, a series of major changes to Companies House and UK company law will be rolled 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 bolster the accuracy and quality of the data held by Companies House. It is believed that 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 harms.   

Change 1: Registered Office Addresses

From 4th March 2024, all companies 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’ 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 as of 4th March 2024, it is no longer possible to 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 not appropriate, they will take action under their regulatory powers. 

If Companies House believe that your company’s registered office is not appropriate, they will change it to a default Companies House. In this case, you will need to provide a new appropriate address with evidence of proprietary ownership within 28 days. If you do not do so, Companies House may start the process of striking your company off the register.

If you are already using a third-party address, such as that provided by Uniwide’s registered address service, you will continue to meet the criteria for a registered company address, and you will not need to take any further action.

Change 2: Statement of lawful purpose

From 4th March 2024, anyone registering or incorporating a new company will need to 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 email address requirement

Registered companies will need to provide an ‘appropriate’ registered email address to Companies House. An email address is considered appropriate if, in the ordinary course of events, emails sent from Companies House would be expected to come to the attention of someone acting on behalf of the company. Your registered email 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 email address will not be placed on the public register of companies; it will only be used by Companies House to communicate 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)

Companies must still accurately maintain the information held in these registers by Companies House. The date for the implementation of this change will depend on when the required law is passed.

Change 5: Introduction of software-only filing of annual accounts

Over the next two years, Companies House is 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”. 

This is not an immediate change; however, companies not using approved software may wish to consider looking at new software for filing future annual accounts. 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 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 the number of times a company can 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 claiming audit exemption will be required to provide an additional statement of their balance sheet. This must a) identify which exemption they are claiming for 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 seeking to use UK companies for illegal purposes. The new ID verification process will need to be used by anyone setting up, running, owning or controlling a company in the UK. The key points to be aware of 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 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 completed directly with Companies House or 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 company law changes, individuals will be able to request that Companies House conceal their home addresses, day of birth, business occupation and signatures from historical filings 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. In more serious cases of risk, it may be possible to request 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 limited partnership (LP) information more accessible and transparent. LPs will be required to:

  • Provide partners’ names, date of birth and usual residential address.  
  • 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 and will be introduced over a period of around six months from when the applicable legislation is passed and implemented.

Change 11: Increased transparency of company ownership

Under the new law, companies will be required to:

  • Record the full names of shareholders who are individuals – or the full names of corporate members and firms – in their registers.
  • Provide a one-off full shareholder list so Companies House can display shareholder 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 persons with significant control (PSC) details, 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 identity. 

These changes are not immediate and will phased in once the required law has been passed. 

Final words

We hope that you have found this guide to the upcoming changes in company law useful. It is essential to review all of the changes and how these will affect you. Some changes have already been introduced, while others will be phased in over the coming months. While the changes will require a period of adjustment for many companies in the UK, in the long term, the impact should be seen with lower levels of economic crime and fraud and growth within the economy.  

Click to rate this post!
[Total: 5 Average: 5]

Share this:

Facebook
Twitter
LinkedIn
Print

Related Posts

Ready to Set Up Your Own Company?

Welcome to our UK company formations portal, where you can set up your company online 24 hours a day.

Scroll to Top