Implications for Directors, Shareholders, and Overseas Businesses

The UK is set to implement significant changes to company law under the Economic Crime and Corporate Transparency Act. These changes, which will be rolled out over the next few years, will bring new responsibilities for company directors and People with Significant Control (PSCs), also known as shareholders.

Registered Office Addresses: New Rules

One of the most notable changes is the introduction of new rules for registered office addresses. From 4 March 2024, all companies will be required to use an ‘appropriate address’ as their registered office. This is an address where any documents sent should be expected to come to the attention of someone acting on behalf of the company and be recorded by an acknowledgement of delivery. Companies using a PO Box as a registered office address will need to change their registered office by 4 March to avoid being struck off the register.

Changes to Company Filings

The new measures will require all companies to confirm that their intended future activities will be lawful. This will be included as part of the annual confirmation statement. Additionally, all companies will need to supply a registered email address to Companies House. This email address will be used to communicate with the company and will not be made available on the public register.

Transition to Software-Only Filing

Companies House is transitioning toward filing by software only. This move aims to ensure more efficient and secure annual accounts filings for companies whilst simultaneously improving the quality of information held on the register. To comply with the new filing requirements, companies will need to find suitable accounting software before the removal of existing web-based and paper accounts filing methods.

Additional Changes to Accounts

Several other changes to accounts will also be introduced in the next few years. These include the requirement for small and micro-entity companies to file a profit and loss account, and for small companies that don’t qualify as micro-entities to file a directors’ report. Filing ‘abridged’ accounts will no longer be an option, and any company that claims an audit exemption will be required to include an additional statement by the directors on the balance sheet.

Improving the Quality of Data on the Public Register

Improving the quality of data on the public register is one of the key aims of the changes to UK company law. To achieve this, Companies House will be equipped with greater powers to query any information that appears to be incorrect or inconsistent. The misuse of company names will be tackled, with stronger checks being carried out on names that may mislead or give a false impression to the public.

Identity Verification Process

The introduction of a new identity verification process will help to deter individuals from using companies for illegal purposes. The requirement to verify identity will apply to any person setting up, owning, running, or controlling a new or existing UK company or limited liability partnership (LLP). This could have implications for overseas shareholders and directors, who may be required to provide satisfactory identity verifications.

Implementation Date

These changes are set to take effect from 4 March 2024, subject to the passing of secondary legislation. Companies House aims to introduce some of these changes on this date. However, further information on these measures will be released in due course, following their finalisation in secondary legislation. Companies will be given sufficient warning and guidance before the changes come into effect.

***Contact us to learn more.