New Companies House Powers

By Tim Sadka & Elizabeth Howlett

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As Companies House prepare to take measures to introduce and implement changes in accordance with The Economic Crime and Corporate Transparency Act 2023 (Act), we address what these developments mean for companies and Limited Liability Partnerships (LLP(s)), and how the implementation will impact the way in which businesses adhere to Companies House rules moving forward.

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Louise Smyth, Chief Executive and Registrar of Companies, remarked that the landmark legislation will serve to “strengthen” Companies House’s position in order to “contribute to a fairer and more transparent business environment”.

Crucially, these changes will not be implemented any earlier than 4th March 2024. We recommend that it will be prudent to take the necessary steps to comply with immediate effect as, following implementation, failure to comply could result in an entity being struck off the register. The upcoming changes include:

• A mandatory requirement for all companies to provide a registered email address;
• Enhanced checks on registered company names;
• Data-sharing with law enforcement agencies and governmental departments;
• Authority to request additional supporting evidence and question information supplied;
• Revised regulations in relation to registered office addresses;
• Mandatory requirements for all companies to declare the company is of lawful purpose;
• Mandatory requirements to confirm the company’s intended activities will be conducted lawfully;
• A pragmatic approach to ensure the register is accurate and up-to-date, with the removal of erroneous data; and
• An annotations tool for information within the register which may require further information in order to remain clear and coherent.

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Email Addresses

The new mandatory requirement for all companies and LLPs to provide a registered email address to Companies House comes as little surprise. Some commentators have argued this change is long overdue, especially given the evolving and digitalised nature of corporate businesses in the current economy. Although this change may appear fairly insignificant, companies and LLPs which fail to comply will be committing an offence. It is worthy to note that the email address which you opt to provide will not be published on the public register, and ultimately the email address will be utilised as a more effective and efficient communicative tool for Companies House to contact you in relation to your business. Businesses may wish to have a generic email address (e.g. compliance@companyname.co.uk), with such address being forwarded automatically to the relevant employee/director responsible for compliance.

Existing companies will be prompted to supply a registered email address from 5th March 2024 when filing your next confirmation statement.  New companies and LLPs will be required to provide a registered email address upon incorporation.  

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Enhanced Checks – Company Names

Enhanced checks on company and LLP names comes part and parcel in the crackdown on fraudulent information being provided and accepted by Companies House. Identity verification and software-filing will be later introduced in order to further protect legitimate companies and LLPs. This will be part of the process of enhancing Companies House’s powers to query information that is provided. This is intended to be a bid to take initial steps to reduce fraudulent information being published onto the register.

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Data-sharing – Government Departments & Law Enforcement Agencies

It comes as little surprise that data sharing with government departments and law enforcement agencies is a change which is being introduced from the 4th March 2024. In our view it’s crucial for there to be collaboration when attempting to take necessary steps to address the issue of fraud.

Although there is currently very little published by Companies House to delve into more specific detail as to how Companies House will be administered in relation to data-sharing with government departments and law enforcement agents, it is evident that the Act provides Companies House with enhanced powers to support investigative matters and comprehensible objectives moving forward. This is an area where we can expect further developments in the future.

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Authority – Requesting Supporting Evidence & Querying Information

The authority to request supporting documentation when information appears inconsistent or duplicated, and in addition the ability to scrutinise, reject and even remove information which already exists on the register, will ultimately act to instil a sense of control over what is being uploaded online by companies and LLPs through the uploading facilities such as WebFiling.

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Registered Office Address

New rules will be implemented in relation to appropriate registered company and LLP addresses. Companies and LLPs will be required to provide an address that is firstly not a PO Box, as this will no longer be deemed permissible as a registered office address from 4th March 2024. In addition, the registered office address should be an address whereby all documentation which is sent is expected to be for the attention of the person acting for and on behalf of the registered company or LLP. We anticipate that, following the Act, the documentation which is sent to the registered office address should be able to be recorded by an acknowledgement of receipt. In any such case, much like the requirement for email addresses, it is crucial that companies and LLPs comply or they face being struck off the register.

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Mandatory Requirements – Lawful Purposes

Upon incorporation, all companies and LLPs must confirm that they intend to form and conduct their business in a way that is lawful. In addition, annual confirmation statements for incorporated companies must now include confirmation that the company’s intended future activities will remain lawful. It will be insufficient to confirm this just once. In addition to the Act’s objectives from a Registrar of Companies perspective objective 4 is notable. This objective aims to ‘prevent companies and others from carrying out unlawful activities, or facilitating others to carry out unlawful activities. The objective’s purpose is clear, and illustrates the necessity to reduce company activities which fall outside of the scope of lawful, and thereby likely boosting confidence in UK companies and LLPs, and encouraging economical investment.

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Maintaining the Register

Enhanced measures are to be taken to ensure that the information included within the register is accurate and up-to-date. Essentially, information contained within the register should not be misleading or contain any duplicated information, nor should it be missing any. This will ultimately serve to provide users with a greater picture of companies and LLPs, not to mention more ease when it comes to relevance and perusing documentation pertaining to the company or LLP.

A tool which allows for annotations to be added will serve to provide further clarification and ease of navigation, as users will be permitted to view annotations which signify any potential issues with information that has been provided.

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Concluding Comments

The proposed changes will serve to improve transparency amongst UK companies and LLPs, provide users with ease of navigation, whether that be a registered company, LLP, stakeholder or third-party, whilst also maintaining the integrity of the information accessible to those who require access to the register.

Ultimately, it is critical for users to comply with the Act in order to ensure the overall success of these changes. Time will tell how the ultimate success of such vigilance can be ensured and maintained. Once these changes have had enough time to take effect, it will be interesting to see whether the changes have made a material difference to the operation of Companies House.

It is clear that Companies House are striving to utilise the powers afforded by the Act in a collaborative approach and attempt to evolve with the progressive nature of UK business, whilst upholding legal requirements and diligently playing a critical role in the clampdown on fraudulent entities. If this collaborative approach does not work, expect to see more prescriptive legislation in the future.

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