Companies House reforms - are you prepared?
The Economic Crime and Corporate Transparency Bill is currently before Parliament and is likely to be passed and receive Royal Assent early in the new year. It is new legislation that ostensibly, sets out to tackle money laundering and other corrupt financial activities carried out via seemingly legitimate business entities. However, the Bill will introduce significant reforms to the way Companies House uses and maintains information that will have consequences for anyone performing the role of the company secretary.
The Bill will introduce measures set out in the Corporate Transparency and Register Reforms White Paper published in February, which itself was a response to several public consultations. The intention is to enhance the powers of Companies House and improve the value and quality of the financial information contained in the statutory registers.
What are the main measures?
Some of the filing obligations for small businesses and micro entities will be simplified. The option of filing abridged accounts is to be abolished and small companies will have to submit a profit and loss statement and a director’s report. Micro entities need not submit a director’s report.
Companies House will have the power to reject documents that it does not believe are consistent with the information it already holds. However, it will no longer have powers to correct the information itself. Companies could be given 14 days to correct any documents rejected by Companies House or face a penalty.
The requirement to submit files in digital format will be extended to include accounts. The Bill also lays the groundwork for future stipulations on requiring all accounts to be submitted in iXRBL format.
Companies will have to verify the identities of directors and persons with significant control but there will no longer be an obligation to maintain a register. The information that would have been on the register will be automatically generated by Companies House. A register of members however, must still be maintained.
There are further measures regarding shareholder information, director qualification, company names and addresses and an extension of the misdemeanors for which a penalty can be imposed.
What happens next?
The Bill will continue its passage through Parliament and although there is plenty in it to debate, there is broad consensus on the general principles. Therefore it should receive Royal Assent in the new year and be implemented, probably in stages, in the ensuing 18 months.
If you are a company secretary or have responsibility for dealing with Companies House on behalf of your business or clients, then it is essential that you familiarise yourself with the forthcoming changes.
UK Training is delivering a half-day course – Preparing for the Companies House Reforms - during which our expert presenter, David Impey will be explaining all the changes and their implications in detail. Visit this page to find out more.
Written by Paul Murphy
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