A significant update to the UK’s corporate transparency laws will take effect in March 2024, bringing with it a host of new requirements aimed at enhancing the integrity and accountability of businesses operating within the country.
This move, part of the Economic Crime and Corporate Transparency Act 2023, aims to bolster the fight against economic crimes by closing gaps previously exploited by malpractices. This means a new focus is needed from directors and CEOs to ensure they’re following the new guidance to the letter. Our team of corporate solicitors can help guide you through the new legislative changes to ensure you aren’t caught out.
What changes have been made?
Central to this legislative change is the heightened scrutiny of corporate information. The Act demands that directors, individuals with significant control over a company, and those tasked with company filings follow updated transparency standards. This development is not just about tightening the existing framework but also introduces a series of new mandates designed to enhance corporate accountability and the ease of pursuing financial crimes legally.
Among the notable changes is the requirement for companies to furnish additional details concerning their shareholders, alongside the imposition of limitations on the use of corporate directors. The legislation also brings changes for limited partnerships, which will now need to process filings through authorised agents and disclose more comprehensive information than before.
The legislation, dubbed the Economic Crime and Corporate Transparency Act 2023, is an amendment to the Companies Act 2006. It builds upon the foundations laid by the Economic Crime (Transparency and Enforcement) Act 2022, a reaction to global events, including the invasion of Ukraine, and the need for increased transparency in corporate ownership, particularly concerning overseas entities.
From March 2024, businesses registered in the UK will navigate a landscape marked by:
- Stringent checks on company names
- Updated rules for registered office addresses—including the necessity of a registered email address
- Annual confirmation of lawful operations
- Greater authority for Companies House to challenge submitted information
Enhanced data matching techniques aimed at detecting and eliminating inaccuracies from the registry.
Data sharing between government departments and law enforcement will be streamlined, thereby improving the capacity to address, seize, and manage assets, including cryptocurrencies.
The Government is also planning a move to digital record keeping system which will see the removal of certain paper-based obligations. This includes maintaining internal registers of directors, secretaries, and persons with significant control, as such details will now be directly filed with Companies House and made accessible on a public record.
The legislation introduces mandatory identity verification for anyone establishing, managing, owning, or controlling a UK company. This will apply to both new and existing company directors and relevant officers, aiming to prevent the misuse of unverified identities in corporate governance.
For company directors and those at the helm of business operations, this is the time to be vigilant that you are compliant with any and all regulations. Although a detailed timeline for how these legislations will be implemented has yet to be unveiled, the direction towards greater transparency is clear. This shift is geared towards providing law enforcement agencies with the necessary tools to investigate and act upon financial irregularities and crimes more effectively. Therefore, it’s important to speak to a regulatory expert to stay ahead of the curve, or you could risk formal investigation and prosecution.
Why has this act been implemented?
The Act is a response to the challenging landscape of corporate fraud, which, according to the government, represents a significant portion of crime in England and Wales. It introduces a broader scope of liability for corporate entities, facilitating the prosecution of financial misdemeanours with a more inclusive definition of corporate responsibility.
In preparation for these changes, particularly the provision against failing to prevent fraud, larger organisations will need to re-examine their risk assessments and preventive measures. This includes adopting practices similar to those outlined in the UK Bribery Act 2010 and the UK Criminal Finances Act 2017, designed to combat bribery and tax evasion.
Contact Us
As we navigate these changes together, our commitment to you remains unwavering. We stand ready to provide the necessary guidance and support to ensure your business not only complies with these new legal requirements but also thrives in a landscape marked by transparency and integrity. If you’d like to talk to one of our expert Corporate solicitors about these changes, fill out our contact form or give us a call on 0330 111 3131.