The Economic Crime & Corporate Transparency Act 2023: What you need to know

How does this affect you?

If you are:

• A new or existing director of a company;
• A person with significant control (PSC) (for example you hold more than 25% of shares in a company); or
• An agent who files on behalf of a company (for example an accountant or company registration agent);

you will be required to comply with the new requirements set out in the ECCTA or face potentially serious sanctions and penalties.

What are the changes?

There are a number of significant changes coming into force from 04 March 2024 which include:

Identity verification:

Anyone who sets up, runs, owns or controls a company will need to verify their identity.

This will apply to all directors and PSCs of new companies, as well as members of LLPs.

For existing companies, all directors, members (or equivalent) and PSCs will have a transition period during which they must verify their identity. Those acting on behalf of a company will also need to verify their identity.

This can be done either directly with Companies House or via an agent.

Various administrative updates:

There will be a number of administrative and filing changes, including how accounts are filed, Companies House fees and changes to protect personal information uploaded to Companies House. However, a number of these administrative changes will not take immediate effect and will be implemented in phases over the next months and years.

Increased transparency & record-keeping:

Under the ECCT, companies must do the following from 04 March 2024:

• Maintain an ‘appropriate address’ as its registered office. This is an address to which any document sent is expected to come to the attention of one of the company’s authorised representatives and can be recorded by an acknowledgement of delivery (for example, a PO Box cannot be used as a registered address in the future).
• Where a new company is registered, the subscribers to that company will need to confirm that they’re forming the company for a lawful purpose, as well as annually confirming that its intended future activities are lawful.
• Record the full names of shareholders in their registers (both for individuals and corporate shareholders).
• Provide a one-off shareholder list for Companies House to display shareholder information.
• Provide a registered email address, which Companies House will use to communicate with the company. For new companies, this must be provided from the date that it is incorporated, from 04 March 2024. For existing companies, this must be provided when the company’s next confirmation statement is filed.

Changes to limited partnerships: 

There will be increased information requirements for limited partnerships, such as providing names, addresses, dates of birth, the provision of a registered office, and a standard industrial classification (SIC) code, as well as a requirement to file an annual confirmation statement.

This information must be provided through an authorised agent registered with Companies House.

The consequences for non-compliance

The ECCTA does not only place increased obligations on organisations, but it also significantly increases the power and authority of Companies House, giving it the ability to impose sanctions and take enforcement action.

Under the ECCTA, Companies House will have the power to:

• Query and reject information filed at Companies House;
• Remove material from the register where it is inaccurate, incomplete, false or fraudulent; and
• Issue financial penalties, an annotation on a company’s record, or prosecution where a company fails to respond to a formal request from Companies House for more information.

The ECCTA also introduces two new offences:

• A failure to prevent fraud: which applies to large organisations of more than (a) 250 employees, (b) £36m in turnover and (c) £18m in total assets; and
• Corporate criminal liability: which essentially makes it easier for companies to be prosecuted for certain offences as senior managers can be held accountable.

What action should you take?

The ECCTA is one of the largest overhauls of company law seen in recent times, and the consequences for non-compliance could be detrimental to your business.

You should therefore be proactively understanding the provisions of the ECCTA and taking measures to ensure your organisation’s compliance in preparation from 04 March 2024 and beyond.

Please note that this information is for general guidance only and should not substitute professional legal advice. If you have specific concerns, we recommend consulting one of our legal experts.