Rubric Law brings you an essential update on the UK Economic Crime and Corporate Transparency Act 2023 (ECCTA), which will be progressively enforced throughout 2024.
The ECCTA aims to safeguard UK corporate structures from misuse and tackle economic crimes, such as money laundering and fraud.
Whether you are a business owner, accountant, or company secretary these insights will be invaluable; enabling you to maintain seamless operations and compliance with the new regulations.
Changes affecting Companies House
Identity verification:
Directors and persons with significant control (PSC) must now verify their identity through direct means or via an Authorised Corporate Service Provider (ACSP) with new directors needing to do so before their appointment. Existing directors and individual PSCs have 14 days, and corporate PSCs 28 days, to verify their identity following any changes. Notably, a future transition period will require all existing directors to verify their identity, although the specifics of this period have not yet been confirmed.
A forthcoming legal provision introduces a criminal offence for unverified directors and also holds the firm and other directors accountable for allowing such actions. This underscores the crucial nature of the verification process, aiming to enhance the integrity and accountability within corporate governance.
Role of the registrar:
The registrar will now play a proactive role in ensuring accurate and comprehensive company data and will be authorised to reject misleading or inaccurate information.
This reform aims to:
- Ensure that documents are delivered correctly to the registrar as required.
- Ensure that the information contained in the register is accurate.
- Ensure that the records kept provide an accurate impression to the public and are not misleading.
- Prevent companies and others from carrying out or facilitating unlawful activities.
Simplified company filings:
Companies no longer need to maintain separate registers for directors, addresses, secretaries, and PSCs, as this information will be reliably held by Companies House. However, a register of members must still be kept.
Company names and addresses:
The ECCTA restricts the use of certain company names that could be linked to criminal activities – there are directions to change a company name used for criminal purposes.
Additionally, a company’s registered office must be an accessible physical address, not a PO box, and companies must maintain an active email address with Companies House.
Digital accounts submission:
All accounts must now be digitally submitted and tagged using standard financial reporting labels (iXBRL). Small companies must file audited accounts unless exempt, in which case it will need to state this on the balance sheet with an explanation for the exemption.
Schedule and fees
Due to the registrar’s extended responsibilities under the ECCTA, there will be an increase in fees. These fees will help cover the costs of activities like investigations and fighting economic crimes. All businesses will need to pay these increased incorporation fees.
The amount will be decided by specific rules and will need approval from Parliament. It has been said that the impact of these higher fees on UK businesses and competitiveness will be considered.
These changes will not happen all at once. They will be gradually introduced over the next year or so, giving businesses plenty of time to adapt. The government has yet to announce a detailed schedule.
Do you need legal advice?
Understanding these updates is crucial for maintaining compliance and ensuring the smooth operation of your business.
If you have any questions please don’t hesitate to get in touch:
0117 435 4350 | info@rubric.law
