ECCTA: The continuing march towards greater UK corporate transparency and more reliable public information

The changes affect both incorporation and administration for companies in the UK, and will grant greater powers to Companies House with the view to boosting transparency and improved information sharing to greater tackle money laundering, fraud and other financial crime.

Key changes under the ECCTA

• Companies House – the ECCTA will grant Companies House greater power to query filings, request further evidence and/or reject filings. Companies House will effectively transition to a body which scrutinises, instead of simply processing, information provided to it.
• Lawful purpose – Upon incorporation, companies will be required to deliver a statement that they are being formed for a “lawful purpose” and existing companies must make this statement annually when submitting their confirmation statements.
• Company names – the ECCTA will grant Companies House the authority to prohibit names which could be used to facilitate crime. In practice, this means that Companies House may reject names which provide a non-existent connection to a foreign government or institution, or where names include computer code. Companies House will also have the authority to direct a company to change its name where they fail to comply with this new regime.
• Identity verification – identity verification will be required for all new and existing registered company directors and persons with significant control (PSCs) and where a new director is appointed, a statement will be required to confirm that they have verified their identity and that they are neither disqualified nor ineligible to be a director. This requirement also applies to members of limited liability partnerships, general partners of limited partnerships and directors of overseas companies which do business in the UK.
• Filings – perhaps a more welcome change for many companies, the ECCTA will abolish the requirement for companies to maintain a register of directors, register of directors’ residential addresses, register of secretaries, and a PSC register, on the basis that Companies House will themselves hold verified and reliable data in this respect.
• Registered Office and Email Address – the ECCTA will require the registered office for a company to be an “appropriate address”, meaning an address to which post can be delivered and recorded. This means that P.O. Box addresses will no longer be appropriate for use.
• Corporate criminal liability for economic crimes – the ECCTA will introduce a new strict liability corporate offence where a company does not have reasonable fraud prevention procedures in place, and there are new offences introduced for delivering documents to Companies House which are misleading, false or deceptive, or which are not provided to Companies House without a reasonable excuse. These offences are punishable by fine and/or imprisonment.
• Fees – it is expected that as a result of the powers of Companies House being increased by the ECCTA, so too will their fees to account for their increased role

Contact us

If you have any questions or would like more information or advice on the implications of the ECCTA, please get in touch with Nick Alfillé, Chris Allen, or Eva Wichtowski.