Entrepreneurs need to be aware that the Government has published its response to a consultation on reform of Companies House that will see the Registrar transformed from a largely passive recipient of information to an active gatekeeper over company creation and a custodian of more reliable data.
A BEIS white paper published last month lays down the Government’s plan for a legal overhaul that will bolster Companies House’s powers and allow it to better tackle crime and fraud and ultimately provide a stronger foundation for boosting enterprise.
The Registrar of Companies (and equivalents in Scotland and Northern Ireland) will be given new powers to maintain the integrity of the register, including powers to query suspicious appointments or filings and, in some cases, request further evidence or reject the filing. Companies House will also have more extensive legal gateways for data sharing with law enforcement, other Government bodies and the private sector, a move welcomed by ICAEW.
The White Paper proposals cover:
- reform of the Registrar of Companies (the Registrar) existing role and powers – to query suspicious appointments or filings and, in some cases, request further evidence or reject the filing;
- identity verification and other anti-money laundering (AML) measures – Mandatory identity verification will be introduced for most individuals incorporating or filing with Companies House. It will be much harder to appoint fictitious directors or beneficial owners. If an individual fails to verify, the public register will be annotated to show this. This will make anonymous filings harder and discourage those wishing to hide their company ownership through nominees or opaque corporate structures. Directors will also have links to their appointments in one place. For many years the ability for anyone to form a UK limited company – often in as little as 10 minutes for just £12 – with no requirement to prove who they are, has been a huge gap in the UK’s money laundering defences;
- enhanced data sharing – Companies House will have more extensive legal gateways for data sharing with law enforcement, other Government bodies and the private sector. A new requirement to file a single set of accounts and simplifying accounts filing options should lead to more consistent financial information across different datasets e.g., Companies House and HMRC;
- improved financial information on the register- A new requirement to file a single set of accounts and simplifying accounts filing options should lead to more consistent financial information across different datasets e.g., Companies House and HMRC;
- enhanced privacy mechanisms- Anyone whose personal information has been made public on the register in the past will be able to apply to have some of that information suppressed; and
- new restrictions over corporate directors – It will be a requirement to have at least one fully verified person directly associated with each entity on the companies register, and implementation of new restrictions over corporate directors will make it more difficult to create anonymous corporate structures. In future, companies will be allowed a maximum of one ‘layer’ of corporate directors, which must be based in the UK, and the natural persons directing that corporate director will be subject to identity verification.
We don’t know yet when all these provisions will come into force, but with £63million of Government investment promised to achieve this there will be a time lapse as the technology required catches up; that said, with the current climate making the transparency of certain foreign investment the subject of great scrutiny, there will be political pressure to fast track this.
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