Companies House: What you need to know about the Economic Crime and Corporate Transparency Bill

Electronic Crime and Corporate Transparency Bill

For our latest blog in the Lessons from Governance 2023 series, we examine the most important changes in the government’s new Economic Crime and Corporate Transparency Bill (ECCT Bill) and the increased powers of Companies House.

At our Annual Conference, Governance 2023, Rachael Watts, ROE Implementation Lead at Companies House, held a stimulating session discussing in detail the provisions found in the new Economic Crime and Corporate Transparency Bill (ECCT Bill), which contains proposed amendments to the Companies Act 2006.

During the session, Rachael framed the discussion of the provisions found in the ECCT Bill, that will substantially alter the role of Companies House from that of a passive recipient of information, into an active and engaged gatekeeper of knowledge.

The Bill aims to enhance the role and powers of Companies House. The three key areas of reform are:

  1. economic crime and corporate transparency
  2. companies, limited partnerships and other kinds of corporate entities
  3. the registration of overseas entities (ROE).

The ECCT Bill will grant the Registrar new powers, which can be exercised on a discretionary basis, using a risk-based approach. These powers include the ability of the Registrar to:

  • challenge all the information submitted to them that appears erroneous, anomalous, suspicious or contrary to sound business practice. The Bill includes provisions that restrict overseas agents from forming UK companies and introduces limits for companies that wish to have a single ‘layer’ of UK-based corporate directors
  • remove inaccurate information from the Register at a faster pace than is currently possible
  • require that the filing of information be done exclusively in digital format  
  • share all the relevant information with law enforcement agencies. These new powers aim at improving data-sharing for better detection and prevention of white-collar crime.

Moreover, the ECCT Bill introduces new identity verification requirements for all new and existing company directors (and equivalents for other entities), persons with significant control (PSCs) and those filing information with Companies House. Director appointments will not be effective until this process has been completed. Those who purport to act without it and PSCs who do not undergo an identity check, will be committing a criminal offence and could potentially incur a civil penalty. The same would apply to companies that have an unverified director.

The provisions include two routes for complying with the identity verification requirements:

  • by arranging the identity check with Companies House through the company secretary or another member of the secretariat team
  • by using a company formation agent or other authorised company services provider.

Furthermore, the ECCT Bill includes amendments to the new Register of Overseas Entities which is currently regulated under the Economic Crime Transparency and Enforcement Act (ECTEA). The ECTEA mandates that all overseas entities that own or lease land or property for more than seven years in the United Kingdom must be listed on a public register maintained by Companies House. The amendments found in the ECCT Bill will expand the scope of the ECTEA to also include as a criminal offence the delivery of false or misleading information to Companies House.

Finally, the ECCT Bill includes provisions that complement the UK limited partnership law passed in 2018. These new provisions aim at strengthening the legal framework and limiting the risk of limited partnerships being used for illicit activities.

For those who would like to read the draft ECCT Bill, it is accessible here: Economic Crime and Corporate Transparency Bill - Parliamentary Bills - UK Parliament

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