Important changes to the Companies Act 2006: what business owners need to know

As a business owner, staying informed about legal changes is crucial for ensuring compliance and avoiding penalties. Recently, there have been proposed amendments to the Companies Act 2006 aimed at increasing transparency and preventing fraudulent activity. These amendments, outlined in the Economic Crime and Corporate Transparency Act 2023 (the “2023 Act”), focus on stringent identity verification for those involved in setting up, running, or controlling companies. Here’s an explanation of what this means for you and your business.

 

Key changes at a glance

 

  • Identity verification: anyone involved in starting or managing a company must verify their identity.
  • Unique identifiers: once verified, individuals will receive a unique identifier for future company-related activities.
  • Authorized Corporate Service Providers (ACSPs): third-party agents (for example, EBA) must be registered and verified to carry out business registrations and filings on behalf of companies.

 

Why are these changes being made?

 

Previously, it was possible to create fictitious identities or falsely register someone as a director or person with significant control (PSC) over a company. This loophole made it easier for criminals to engage in money laundering or fraudulent activities. To close these gaps, the government has introduced stricter rules to ensure the accuracy of information in the Companies House register.

 

What does this mean for you?

 

Identity verification is now mandatory

 

If you’re involved in setting up, running, or controlling a company, you must verify your identity. This applies to:

 

  • Directors: anyone acting as a director must complete identity verification.
  • Persons with Significant Control (PSCs): individuals with a controlling interest in a company must also verify their identity.
  • Document filers: those submitting documents on behalf of a company need to undergo verification (unless they are employees of authorised providers).

 

There are two ways you can verify your identity:

 

  • Directly with the Registrar (Companies House).
  • Through an Authorized Corporate Service Provider (ACSP): these are third-party agents, such as EBA, that handle the identity verification process on your behalf. ACSPs will need to be registered and UK-supervised for anti-money laundering purposes.

 

Once your identity is verified, you’ll receive a unique identifier. This identifier will be used whenever you interact with Companies House in the future, making it easier to track company-related activities and prevent fraudulent activities.

 

When is it happening?

 

Full implementation is expected by early 2025. Additionally, there will be guidance and further details released over time to help businesses comply with these new requirements. Companies House and professional bodies, such as the ICAEW (Institute of Chartered Accountants in England and Wales), will provide guidance to help ACSPs carry out identity verification checks.

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David Elliott

Chartered Accountant, BSC, FCA

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