On Thursday 21 May 2024, CGIUKI presented a breakfast session − kindly hosted at the EY offices − at which the governance community could come together to hear Maureen Beresford, Acting Director of Corporate Governance and Stewardship at the Financial Reporting Council and Michelle Lewis, Principal Implementation Advisor at Companies House highlight some key changes being introduced through the updates to the UK Corporate Governance Code and the Economic Crime and Corporate Transparency Act.
After a warm welcome from Marco Murray, Director of Entity Compliance and Governance at EY, Michelle outlined what company secretaries need to know about ECCTA.
More powers for Companies House
The changes introduced by ECCTA are intended to ensure that the data held on the Companies House register is more accurate and transparent, and they should make it easier for the registrar to protect and defend individuals whose identities and addresses have been hijacked by criminals.
Changes will be introduced in a phased manner over the next few years dependent on the passing of secondary legislation. Changes at Companies House of which company secretaries should be aware include:
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compulsory identity verification checks for directors and people with significant control
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streamlining of accounts and online filing
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increased accessibility and transparency of limited partnerships’ information (which will need to be filed through an authorised agent)
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enhanced protection of personal information held on the register.
Given the recent announcement of a general election in July and the Act’s dependence on secondary legislation, the question of cross-party support for the Act has become very pertinent. The sense was that, whoever is in power post-election, it is likely the required secondary legislation will be passed.
Identity verification
Many were concerned about the introduction of identity verification for directors. Louise was candid, explaining that the new process will require some system development; the hope is that this will go live in 2025 but Companies House will share more detailed timeframes when they become available.
While the exact mechanism for this is yet to be confirmed, Michelle reassured the audience that the intention is that it should be a simple online process. Further music to the audience’s ears was that the verification process for directors will only need to be completed once, after which directors will be issued with an identifier to be used across all their appointments.
Any director of a company registered with Companies House will need to go through the identity verification process, even if the individual is not based in the UK. There will be a 12-month transition process during which existing company directors will need to complete the identity verification process (this will be aligned with the annual confirmation statement); newly appointed directors will need to verify their identity before they begin their role. New companies will be required to complete the identity verification process for relevant people at the point of incorporation. Governance professionals may wish to provide support to directors to explain the process and timelines, but they will not be able to complete the identity verification on behalf of board members.
