Companies House's powers to be reinforced in an attempt to purify the corporate registry.
Strengthening Corporate Transparency: Companies House Receives New Powers
On the 4th of March 2023, Companies House, a UK government agency responsible for maintaining the register of companies, was granted new powers by the Economic Crime and Corporate Transparency Act 2023 (ECCTA). These powers aim to combat fraud and corruption by improving the accuracy and trustworthiness of the Companies House register.
The ECCTA introduces several reforms, including mandatory identity verification for directors and persons with significant control (PSCs), tightened Anti-Money Laundering (AML) regulations, and the centralization of registers. These measures are designed to reduce fraud risks, improve data consistency, and strengthen protections against corporate fraud and corruption.
Under the new rules, identity verification will become mandatory for new directors and PSCs from the 18th of November 2025, with existing directors and PSCs having a phased transition period to comply. Companies House will also become the single source of truth for directors, secretaries, and PSCs, improving data consistency and reducing fraud risks.
The focus on AML regulations and enhanced due diligence highlights Companies House's increased role in combating financial crimes. Companies must now provide an email address when registering, and the agency has been given enhanced information gathering powers and the ability to reject documents before they are filed on the register.
Louise Smyth, CEO of Companies House, stated that these new powers mark the most significant change for Companies House in its 180-year history. To support these new responsibilities, Companies House has recruited over 160 extra staff and plans to hire around 60 more.
The new powers also include restrictions on what companies can use as their registered address and prohibitions on names connected to a criminal purpose, suggesting a connection to foreign governments, or containing computer codes. Companies will be required to affirm that they are formed for a lawful purpose, and failure to provide additional documentation when requested will be a criminal offence for a company and its directors.
These reforms are intended to improve the accuracy of data held by Companies House and prevent UK companies from being used for unlawful activities. The implementation of these reforms suggests a commitment to enhancing resources and capabilities to tackle fraud more effectively. However, the specific details on recent funding allocations for Companies House in relation to these reforms are not provided in the available sources.
There have been long-standing reports of fake names, addresses, and incorrect information being used on the Companies House register. The new powers are a step towards addressing these issues and improving the transparency and integrity of the UK's corporate landscape.
- The new powers granted to Companies House by the Economic Crime and Corporate Transparency Act 2023 will help in strengthening the finance sector, as tightened Anti-Money Laundering (AML) regulations and enhanced due diligence will combat financial crimes.
- To demonstrate their commitment to lawful business practices, companies registered with Companies House will now be required to affirm that they are formed for a lawful purpose, thus improving the business environment by preventing the misuse of UK companies for unlawful activities.
