UK Company Law update

The Economic Crime and Corporate Transparency Act 2023 is changing UK Company Law.
The purpose of this article is to explain the impact of the changes on new company registrations and existing UK companies.

The first changes were introduced on 4th March, 2024, and many more will follow.

Changes to the UK company registration process in 2024.

The following changes have been implemented with effect from 4th March 2024 affecting the UK Company Registration process for all types of registered companies i.e. Limited Companies, Limited Liability Partnerships and Companies Limited by Guarantee.

• Registered Office Address

  The need to provide a formal address as part of the company registration process is unchanged. However, Companies House have now specified that the registered office should be at an appropriate address, which they describe as one where:

  • a document addressed to the company, and delivered there by hand or by post, would be expected to come to the attention of a person acting on behalf of the company; and
  • the delivery of documents there is capable of being recorded by the obtaining of an acknowledgement of delivery. This requirement rules out the use of POBox addresses but are usually satisfied by company formation agents. Our service
• Duty to provide an appropriate registered email address (REA) when registering a company
  • The purpose of the REA is to allow Companies House to communicate directly with the company. The REA will be used to send reminders and notifications of dates upon which a company is due to file documents such as accounts, confirmation statements etc. The REA will also be used by Companies House to request information about a company or its officers i.e. Directors, shareholders, Persons of Significant Control (PSCs) or any other information on the public record.
  • The email address supplied will NOT appear on the public register and will remain private
  • If several companies are administered by the same individual, such as an accountant or solicitor or professional company secretary they can share one email address.
  • An appropriate REA is intended to be one which, in the ordinary course of events, ensures the person acting on behalf of the company will receive emails sent by the Registrar of Companies.
  • Any email address is adequate, and
  • It does not need to be set up specifically for this purpose,
  • It does not need to be at the company’s domain (e.g. controller@abacus .co.uk)
  • It can be the same email address for a number of companies – for example, a group of companies could provide the same REA for each group company
  • It does not have to be a specific, personal address of a company director or other officer
  • It can be the email address of the company’s accountant or other agent who oversees company secretarial work on their behalf.
  • It is not known whether Companies House will verify an email address during the company registration process, for instance, by checking you have access to it at the time you supply it.The latest legislation has been introduced to enable the registrar of companies to better monitor and supervise Companies on the Companies House register. Eventually, unanswered emails will lead to further enquiries by the Registrar and possible sanctions. Companies that do not monitor their emails from Companies House will be taking a risk which may lead to their companies being struck off the register. Having a company restored to the register is an expensive business (and that is before taking into account the damage to reputation and loss of business)

• New statement of lawful purposes:

  The new legislation requires the founding members (subscribers) to confirm that they are registering a company for lawful purposes.

  TO Register a company go to client registration

The changes referred to above also have an impact on existing companies.

• Registered Email Address

  The legislation states that a registered email address must be included in the first confirmation statement with a confirmation date after the new requirements come into force. In practice, for companies or LLPs that exist before 4 March 2024, it means the first confirmation statement with a made up date of 5 March 2024 or after must include an appropriate email address. In fact, we understand that it will not be possible to submit that first post 4 March 2024 confirmation statement without an email address.

• Lawful purpose statement

  All companies will have to confirm annually in their confirmation statement that the company’s future activities will be lawful. This requirement will apply to all confirmation statements with a statement date from 5 March 2024 onwards. Companies House has published an updated version of Form CS01 (Confirmation Statement) which includes the new lawful purpose statement.

Other changes to UK company law that have been agreed will be phased in over the next two to three years. These are described below:

• Annual accounts to be filed using approved software only.

  Companies House will, in future, only allow annual accounts to be filed if approved software is used for that purpose. The majority of established UK companies already use software filing to submit their accounts, so this change should not pose a problem for them. However, smaller companies and start-ups will have to start using software to file their accounts as well even when filing non-trading and dormant company accounts. We offer a service to file non trading and dormant company accounts which saves clients having to purchase and master the necessary software.

• Accounts filing obligations.

  Prior to these changes micro-entity, small and dormant companies were not required to include much information in their accounts. The latest changes are intended to improve transparency by ensuring that more key financial information, such as turnover and profit or loss, is available to view on the public register. When Companies House are ready the new accounting requirements will be as follows:

  • small companies and micro-entities will be required to include a profit and loss account when they file their annual accounts with Companies House.
  • Small Companies will also be required to file a director’s report with their annual accounts.
  • There will be no option to file abridged accounts.

• Audit Exemption.

  Some Companies can be exempt from the requirement to have their financial statements audited. These companies are usually, small and micro- entity companies, dormant companies,parent companies and subsidiaries. Companies that do qualify for the audit exemption will need to include an additional statement on the balance sheet explaining which exemption they are claiming and confirming that they meet the criteria.

• Identity verification requirements for new company registrations.

  The entire thrust of The Economic Crime and Corporate Transparency Act 2023 is to make it as difficult as possible for companies to be set up as separate legal entities ( thus protecting their shareholders and directors from liability) without all the the officers of a company being identified and traceable. The calculation being that Identification and traceability should act as a deterrent to corporate fraud. To this end:

  • It will be a legal requirement for anyone who registers, runs, owns, or controls a company or incorporated partnership in the UK to provide details of their identity to Companies House.
  • Individuals will be able to verify their identity directly with Companies House. As an alternative individuals will be able to choose indirect verification through an Authorised Corporate Service Provider (e.g. company formation agent, accountant, legal advisor).
• Identity verification requirements for existing companies already registered at Companies House.
  • Officers, shareholders and PSCs already on the Companies House Register will also have to provide their ID and proof of address once the new regime is in place. Following the introduction of the new regime there will be a transition period allowing all company officers and PSC’s enough time to comply.
  • Officers,PSC’s, Relevant Legal Entities (RLEs) being newly appointed to a company or limited partnership already registered at Companies House will be obliged to complete their identity verification as soon as possible – and before their appointment is notified to Companies House.
  • Individuals will need to verify their identity within14 days of registration at Companies House. Relevant Legal Entities (RLEs) will have to comply within 28 days.

• Suppression of personal information at Companies House.

  A problem that some individuals experience is that their personal information has, in the past, been placed on the Companies House Register. Once on the register it has proved difficult to remove. It will soon be possible for individuals to apply to the Registrar of Companies to hide the following personal information from historical filings on the public register:

  • Home addresses (in most instances) and in particular when the address was previously used as a Company’s registered office.
  • Full date of birth on any documents registered before 10 October 2015. Current requirements are for month and year only
  • Occupation
  • An individual’s signature

• Suppression of information to protect individuals who are at risk of harm.

  Individuals who are at risk of harm if their details are published on the Companies House register can ask the Registrar of Companies to hide their personal information. Applicants will be required to provide supporting evidence, such as court orders, before the Registrar will comply. The information that will be suppressed will include:

  • their name or previous name(s)
  • any sensitive address
  • other personal details, such as service addresses and their partial date of birth

• Shareholder information.

  Companies will have a duty to provide Companies House the following:

  • The full names of shareholder individuals
  • The full names of corporate shareholders
  • A full list of shareholders in the next Confirmation Statement
  • Shareholders will also have an obligation to provide the companies in which they hold shares the necessary information. They must comply with that obligation within 2 months of acquiring the shares.
  • Shareholders will also be obliged to notify the companies in which they have invested of any changes to their registered details within 2 months of those changes.

• Information on People with significant control (PSCs) and Relevant Legal Entities (RLEs).

  • Companies claiming exemption from providing information about PSCs will have to state on their Confirmation statement, how they meet the exemption conditions.
  • Where a PSC is an RLE, a statement on the Confirmation statement must state the conditions allowing the RLE to be registered as a PSC.

• Corporate Directors.

  At present UK companies can appoint corporate directors to their board of directors providing there is at least one natural person also appointed as a director. In future corporate directors will only be allowed if they are UK registered companies and each director in the appointee is a natural person.

• Abolition of some Company Registers.

  Companies will no longer be required to maintain the following registers internally:

  • Register of Company Secretaries
  • Register of PSCs
  • Register of directors
  • Register of director’s usual address

Companies House also make the point that your company may be struck off the Companies House register if you do not provide a registered office address that meets all of these requirements.

For more information about restoring struck of companies go to our UK Company Restoration page.