Changes to Corporate Transparency Law

In November, we published a blog on the Economic Crime and Corporate Transparency Act. 

As mentioned in our blog post, not all of the measures in the Act were going to come into force immediately, but some were scheduled for early 2024 and they are now in force. 

From Monday 4th March, the powers that Companies House uses to monitor data quality and reliability have been updated and enhanced. This is also aimed at addressing misuse of the companies register. 

What’s changing?    

The changes include: 

  • greater powers to query information and request supporting evidence where it’s felt necessary  
  • all companies must now provide a registered email address 
  • subscribers must confirm the lawful purpose for the formation of their company at the point of incorporation and on their confirmation statement, they must state that its intended future purposes will also be lawful 
  • Companies House’s powers to tackle and remove factually inaccurate information will strengthen 
  • Companies House will also now be able to share data with other government departments and law enforcement agencies 

Rules for registered office addresses  

Companies must now have an ‘appropriate address’ as their registered office at all times. This means an address where: 

  • any documents sent there should be expected to come to the attention of a person acting on behalf of the company 
  • any documents sent there can be recorded by an acknowledgement of delivery 

This means that a PO Box can’t be used as a registered office address. However, a third-party agent’s address can still be used if it fulfils the conditions above.  

Companies could be struck off the register is they don’t that do not have an appropriate address. 

If Companies House identify an inappropriate registered office address, it will be changed it to a default address.  The business must then provide an appropriate address, along with evidence of a link to that address, within 28 days. If Companies House does not receive the required evidence, they will start the process of striking the company off the register.  

Company names 

Companies House can now reject an application to register a name where they believe that: 

  • the name is intended to facilitate fraud 
  • the name is comprised of – or contains – a computer code 
  • It’s considered that the proposed name may lead people to believe that  the company is somehow connected to a foreign government or an international organisation 

Companies House can also order a company to change its name, and if it fails to do so within 28 days, a new name will be imposed; this could be, for example, the registered company number. 

Companies House can also remove a name from the register while waiting for a response to the name change order.  

If the response is not received within the 28-day time limit, it will be treated as an offence.  

It will also be an offence if a company ignores a name change order and continues to use that name.  

These new measures will also be accompanied by new criminal offences and civil penalties.  

Why these new measures? 

Companies House said that the measures were in response to the misuse of UK companies by criminals to commit offences such as fraud, money laundering and other forms of economic crime. 

The tightening of rules on the use of register is concentrating first on unconsented use of the names and addresses of individuals. The new system makes it much quicker and easier to report and remove personal information if it’s found to have been misused. 

In order not to cause inconvenience for legitimate businesses, the phased changes will be woven into the existing reporting cycles; these include the requirement to update a company’s confirmation statement.   

There are other measures in the Act, such as identity verification and accounts reform, but these will be introduced in the months and years to come. Our blog post and the legislation itself provide more detail on these. 

The Companies House website will provide more information in due course. 

Increases to fees  

On 1st May 2024, Companies House increased its fees to make them a more realistic reflection of the costs of providing their services. Its website gives more details about the new fees. 

What you need to do  

With the law changing over the next few months and year you need to be sure you have the most up to date and accurate information for your business.   

The legal teams at rradar monitor developments in company and corporate law to ensure that you are always aware of the latest legal position regarding you and your business.  

From advice to help with documents, we cover everything from compliance to managing trading relationships and business growth, helping you to overcome risk and keep your business moving forward, visit our specialist Corporate and Commercial legal team page here.