The ECCTA is now in force – and the legal changes are under way
The Economic Crime and Corporate Transparency Act has now come into force and several of the measures that affect company secretaries are already having an impact. Below is a summary of the key measures and an appraisal of where we are now, as far as implementation is concerned.
The first wave...
The first wave of new rules came into force on 4 March 2024. They include:
- The introduction of the Registrar’s new statutory objectives to promote and maintain the integrity of the register and help Companies House (CH) bear down on those who abuse corporate structures to perpetrate economic crime.
- New CH powers to query, reject and remove information and annotate register where it perceives potential issues.
- New rules regarding the registered office and service address.
- New requirement for companies to register a statutory email address at CH.
- A ‘Lawful purpose’ statement is now required on new company formation and on annual confirmation statements
- There will be stronger checks on company names.
- CH has the new power to 'clean' the register, using data matching.
- CH has new powers to data-share with other government departments and law enforcement.
Filing - what do you need to be doing?
The new powers to query, reject or amend can be exercised retrospectively, so check that information already filed is consistent with what's been filed before. Also check that what has been filed with other bodies is accurate and not misleading.
You should consider making extra checks on new information being filed to minimise risk it is queried, rejected or annotated- at least consider 'a second pair of eyes' - to pick up on items that do not look right. This could, for example, include an unusual increase in share capital or listed directors who seem to be surprisingly old or young.
New registered office and service address rules
Check existing registered offices are 'appropriate addresses' because CH will be doing that under new powers to 'clean' data. If not, you will need to change the registered information before the next confirmation statement. For example, PO Boxes will not be allowed.
Service addresses must allow 'effective' service on directors, persons with significant control and shareholders.
New registered office and service address rules
The best practice is to set up a dedicated email address, rather than use officer or employee's existing business email, then emails are less likely to get lost in the deluge of other business and are not tied to one person, who may leave. The same email address can be used for more than one company, if there is a group of companies or you are an accountant corresponding with CH on behalf of multiple clients.
Think carefully about who has access to emails to that address in-house or externally. Have processes in place to include taking someone off the email group if they leave/change job role.
What is a lawful purposes statement?
There is now a requirement for all companies to confirm they are forming the company for a lawful purpose when they incorporate. They must also confirm that intended future activities will be lawful. This must be clear on their confirmation statement and in paper forms.
Company name checks
Check that existing and new companies pass stronger name checks, for example do not contain computer code and are not intended to facilitate offence involving dishonesty or deception.
Transparency
There is an obligation to ensure that information on public record is 'clean'. For example, the same director, shareholder or PSC should not be using different variations of their names on different company records.
Try to ensure that filings with different bodies are available to whoever files at CH, so that person can make sure filings across bodies are consistent and thus avoid queries or rejections. Companies House will be able to check that other information as well when deciding whether your CH filing is accurate or inconsistent, which may arouse suspicion.
Are you on top of all those changes?
The Economic Crime and Corporate Transparency Act represents the most significant reform to the way Companies House operates in its history. There is a lot for Company Secretaries to understand and make adjustments for. UK Training’s half-day course Preparing for the Companies House Reforms is an essential guide that will help you to fully understand and comply with these important legal changes.
http://www.uktraining.eu/news-article/the-eccta-is-now-in-force-and-the-legal-changes-are-under-way/175