The Economic Crime and Corporate Transparency Act 2023 (ECCTA 2023) marks a significant milestone. Designed to fortify transparency and enforcement mechanisms, the Act builds upon the foundations laid by the Economic Crime (Transparency and Enforcement) Act 2022. This legislation introduces substantial changes for UK companies, reshaping various facets of corporate compliance and information disclosure.
Key Objectives of ECCTA 2023:
Empowered Registrar: The bill expands the powers of the Registrar of Companies House, enabling more robust scrutiny over company creation. This includes new authority to assess, remove, or reject information on the companies register.
Enhanced Financial Transparency: Striving for improved financial information on the register, the act aims to facilitate greater transparency, aiding informed business decisions.
Strengthened Investigation and Enforcement: Companies House gains augmented powers for investigating and enforcing regulations. The bill introduces enhanced cross-checking of data with other public and private entities when anomalous filings or suspicious behaviour is detected.
Personal Information Safeguards: Heightened measures will be implemented to safeguard personal information submitted to Companies House, aiming to mitigate fraud and related risks.
Continue reading to grasp the implications of the Economic Crime and Corporate Transparency Act 2023 for your company.
Anticipated Changes for Companies
New Record-Keeping Requirements: Companies now face the obligation of recording individual members’ forenames, surnames, and service addresses in the register of members. Traded and non-traded companies must submit a one-off confirmation statement with specific membership details to Companies House. Criminal sanctions await members failing to update their details within two months, raising concerns about the increased record-keeping burden.
Identity Verification Mandate: A mandatory identity verification process is instituted for company directors, persons with significant control (PSCs), and members of limited liability partnerships (LLPs). Directors of newly formed companies must undergo identity verification before applying for company formation, with subsequent appointments requiring prompt verification before notifying the Registrar of Companies. Non-compliance constitutes a criminal offence.
Two methods of identity verification are anticipated: direct verification through Companies House and indirect verification through an Authorised Corporate Service Provider (ACSP). The government aims to address fictitious director registrations while allowing for practical implementation and a risk-based approach to verification.
Nominee Shareholders and Corporate Directors: The Act empowers the Secretary of State to regulate nominee shareholders and imposes restrictions on the use of corporate directors. Only corporate entities with legal personality can serve as corporate directors, with their identities verified before appointment.
Submission of Documents to Companies House: The Act introduces restrictions on document submissions at Companies House, requiring individuals to have verified their identity. ACSPs or their officers/employees can also submit documents on behalf of individuals.
Further changes are expected for the Register of Overseas Entities, annual confirmation statements, company names, and financial reporting requirements. Detailed guidance and secondary legislation will provide clarity, with most provisions taking effect at least a year from now. Companies and administrators are urged to proactively prepare for these impending legislative changes by identifying individuals subject to identity verification, reviewing filing practices, maintaining updated records, and assessing the presence of corporate directors within group structures. To find out more about how Debt-Claims can assist your business, contact us today or call us on 02475 185 608.