How are you preparing for the Companies House reforms?

WHAT ARE THE REFORMS?

 The ‘Corporate Transparency and Register’ reform paper, originally published in September 2020, outlines major changes to the way Companies House works in order to increase transparency of UK corporate entities and avoid money laundering crimes. The changes aim to increase the reliability of the data, showing who’s behind each company, so businesses have greater assurance when they’re entering transactions with other companies.

Under the proposals, Companies House will gain more powers enabling it to query, investigate and remove information from the register.

Directors and persons with significant control (PSCs) won’t be appointed until their identity’s been confirmed and presenters will not be able to file information on behalf of a company until their identity’s verified. This will be through a new verification process which promises to be a ‘fast, efficient, 24/7 digital verification process’ via an online portal.

What are the requirements?

The compulsory identity verification will be a combination of document-based verification (i.e. driving license and passport). The Government’s confirmed that the I.D. checks would take “a matter of minutes”, and that in most cases, companies will still be able to incorporate easily within 24 hours.

Even existing registered companies and agents will also be required to comply with the new identity verification requirements. The Government intends to implement a transitional period to enable verification of existing directors and PSCs at Companies House.

Directors and PSCs are only required to be verified once at Companies House, using the same verification information provided across any subsequent appointments. Presenters who file information at Companies House on behalf of a company will also only be required to be verified once.

How does this affect you?

These reforms will affect new and even existing companies because it applies retrospectively.

The consequences for non-compliance with the requirements could result in delays of incorporating new companies, penalties applied to companies and even company strike-off.

As a result, false or fraudulent information will be detected and queried by Companies House and where needed, removed from the register if evidence to support this isn’t provided.

The Registrar of Companies will also be granted a new statutory discretion to query, request evidence for, amend or remove information prior to it being placed on the register. The “good faith” approach for receiving information won’t be applicable anymore.

Despite no set timetable for the reforms as of yet, which also requires legislation before it comes into force, a lot of planning will need to be underway in order to meet the new requirements.