News Story: Company law reform/Economic crime

Economic Crime and Corporate Transparency Act 2023 passes into law

On 26 October 2023, the Economic Crime and Corporate Transparency Bill received Royal Assent, becoming the Economic Crime and Corporate Transparency Act 2023 (ECCTA 2023) (Government News Story). The Act introduces a broad package of measures to tackle economic crime more effectively, including fundamental reforms that will expand the role and powers of the registrar of companies and modernise Companies House operations. An identity verification regime for new and existing directors, LLP members and people with significant control, together with other changes to improve corporate transparency, will affect how every UK corporate entity is formed and administered.

ECCTA 2023 widens the scope of corporate criminal liability, creating a new offence of failure to prevent fraud committed by employees or agents that will apply only to large organisations. The Act also expands the common law identification doctrine to allow for the attribution of criminal liability to companies where senior managers commit certain economic crimes (see FC Features 12 April 2023 and 16 June 2023).

Many of these far-reaching company law reforms will be effected through extensive amendments to the Companies Act 2006 and implemented through (as yet unpublished) secondary legislation. They will also require significant development and upgrades to Companies House systems and procedures. In a new Blog Post: A big moment for Companies House published to mark Royal Assent, the registrar has indicated that she expects a number of changes will come into force in early 2024, including:

  • measures to improve the integrity of the registers kept by Companies House, including greater powers to check, query or reject information submitted to it as well as removing information already on the register in some cases;
  • the registrar's new powers to share information with other government departments and law enforcement agencies;
  • new rules for registered office addresses and a new obligation to register an appropriate email address;
  • greater control over company names;
  • changes to the requirements for registering new companies to include a new statement by subscribers that the company is being formed for a lawful purpose. Companies will also be required to confirm in the annual confirmation statement that their future activities will be lawful; and
  • increased Companies House fees.

The new identity verification regime is not included in this list of early measures. The government has updated its collection of Factsheets to reflect changes and additions to the Bill made during its passage through Parliament.

FromCounsel will update subscribers on our approach to revising content once the government has confirmed further details of its plans for implementation. FC will publish an overview of the key company law aspects of ECCTA 2023 that will affect corporate practice in due course.

First published on the Corporate News Service on 26 October 2023.


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