Unveiling Accountability: Analyzing the Impact of the Economic Crime and Corporate Transparency Act 2023 on Company Governance and the new objectives and powers of the Registrar of Companies
The Economic Crime and Corporate Transparency Act (ECCTA) received Royal Assent on 26 October 2023. The Act is intended to strengthen the powers of law enforcement agencies, improve transparency over UK companies, make it easier to prosecute corporates for certain financial crimes, and introduce a new failure to prevent fraud offence. This article concentrates on ECCTA reforms to the role and powers of the Registrar of Companies. Louise Smyth, Registrar of Companies for England & Wales (Registrar) confirmed on 3 January 2024 that the ECCTA will result in certain changes to UK company law and that these will be implemented from March 2024.
Under the existing provisions of the Companies Act 2006 (2006 Act) the role of the Registrar is to register company information and make it available for public inspection. Part 35 of the 2006 Act givers the Registrar certain administrative powers in relation to the register but these powers are constrained in the Registrar’s ability to ensure and verify the integrity and veracity of the information on the register. The ECCTA provides for new objectives for the Registrar to improve the accuracy and integrity of information on the register, and gives the Registrar new powers whilst enhancing existing powers to support the Registrar in implementing those objectives.
Relevant changes to UK Company Law
The government has published a website which contains sections on the main changes to be implemented by ECCTA – https://changestoukcompanylaw.campaign.gov.uk
The new powers include:
- Greater powers for Companies House to query information, such that it will be able to scrutinise and reject information that appears incorrect or inconsistent with information already on the register. In some cases, it will be able to remove information.
- Stronger checks on company names that may give a false or misleading impression to the public.
- New rules for registered office addresses which will mean that all companies must have an appropriate address at all times. Companies will not be able to use a PO Box as their registered office address.
- A requirement for all companies to supply a registered email address.
- A requirement for all companies to confirm on incorporation that they are forming the company for a lawful purpose and annually that the company’s future activities will be lawful.
- Annotations on the register to let users know about potential issues with the information that has been supplied to Companies House.
- Taking steps to clean up the register, using data matching to identify and remove inaccurate information.
- Sharing data with other government departments and law enforcement agencies.
UK companies and their advisors need to be aware of the new rules when collating information required to incorporate a new UK corporate entity to entered on the Register.