UK Corporate Legislation is Changing – what you need to know

This new piece of legislation recently adopted in the UK, known as Economic Crime and Corporate Transparency Act aims to tackle the following key areas:

Economic Crime: The Act introduces various measures to combat economic crime, including:

• New corporate offence of failure to prevent fraud: This holds organizations accountable for fraud committed by their employees or agents if they did not have adequate fraud prevention procedures in place.
• Enhanced powers for law enforcement agencies: This includes measures to combat money laundering, kleptocracy, and sanctions evasion.
• Improved corporate transparency: This involves measures to ensure beneficial ownership information of registered companies is accurate and accessible.
• Identity verification for company directors and beneficial owners: This aims to prevent the use of nominee directors and hidden ownership structures.

Other important areas that will be affected by the new legislation.

Identity verification: Anyone submitting information with the Companies House (Registrar of Companies) – i.e. filing or submitting any documents on behalf of the Limited Company or Limited Liability Partnership, as well as any director, shareholder or a person with significant control for a new or existing company, will need to have their identity verified directly by the Companies House or through an authorised agent. No appointment of the Director or a Person with Significant Control will be accepted by the Companies House, unless their Identity has been verified through appropriate channels.

More powers to the Companies House to review and reject information : To ensure corporate records kept at the Registrar of Companies are accurate, the act provides the Registrar of Companies with new enhanced powers which allow them to review, challenge and reject information which is submitted for filing. They will also be able to remove information from public records which they believe is misleading or incorrect.

Registered Office address and a Company E-mail address : Legislation has introduced a new requirement for all Companies and Limited Liability Partnerships to provide valid “appropriate” Registered Office address, i.e. dissolving the use of PO Boxes for the purpose of Registered office address. At the time of incorporation or time of the first annual return following the implementation of the new legislation, business entities will need to provide Registry with a contact email address. This will be for the Registrar of Companies internal records and will not be put on public records.

Business Names of registered Companies : Companies House will have powers to prevent certain names from registration, if they, for example, can be perceived as intended for use to commit crime.

Changes to the Register of Overseas Entities : Certain changes will be made to the Register of Overseas Entities in a way that if an overseas entity fails to respond to the Registrar of Companies’ request for any information, it will not be allowed to dispose of its UK property assets.

Changes to Annual Accounts Filing : Over the period of the following 2-3 years, all limited companies, including non-trading companies and dormant companies, will be required to file their Annual Accounts with the Companies House using pre-approved software.

Company Registers : Companies will no longer require to keep and maintain their Registers of Directors and People with Significant Control.

Limited Partnerships : New legislation providers stricter regulations and requirements for the registration of Scottish Limited Partnerships.

In other words, the ECCT Act is a complex piece of legislation with wide-ranging implications for businesses and individuals in the UK and international entrepreneurs doing business in the UK. It is still in the early stages of implementation, with many of its provisions yet to come into effect. However, it is already having a significant impact on the way business is conducted in the UK.

If you have any specific questions about the ECCT Act, please feel free to ask! Drop us an email or give us a call to learn more how new legislation will affect your Limited Company or Partnership.