On 29 February 2024, the Economic Crime and Corporate Transparency Act 2023 (Commencement No. 2 and Transitional Provision) Regulations 2024 were made. The regulations bring into force on 4 March 2024 a raft of key company law reforms under the Economic Crime and Corporate Transparency Act 2023 (ECCTA 2023). These include far-reaching changes to the role and powers of the registrar of companies and the Companies Act 2006 framework for registering and administering companies. The reforms in force from 4 March are wider than previously signalled by Companies House and extend to changes to the disqualification regime for directors (see FC Feature 22 January 2024). However, the mandatory identity verification regime for new and existing directors, people with significant control (PSCs) and those filing documents at Companies House is excluded as expected. The regulations also make transitional arrangements for new requirements relating to confirmation statements and the register of overseas entities (ROE).
In tandem with these reforms, the government's existing power under s 87(4) Small Business, Enterprise and Employment Act 2015 to restrict the use of corporate directors will also be implemented to a limited extent on 4 March 2024. Under regulation 2 Small Business, Enterprise and Employment Act 2015 (Commencement No. 8) Regulations 2024, a new s 156B CA 2006 will enable the Secretary of State to make regulations allowing derogations from the (as yet unenacted) requirement that directors are natural persons.
Only limited aspects of ECCTA 2023 have come into effect since passing into law in October 2023 (see FC Feature 26 October 2023). These include measures in force from 26 December 2023 to strengthen the corporate criminal liability framework by attributing criminal liability to companies where senior managers commit specified economic crimes (see Corporate personality, Q&A here). A small number of provisions came into force under the first set of commencement regulations on 15 January 2024 (see FC Feature 16 November 2023).
The government has republished its collection of ECCTA 2023 Factsheets.
On 4 March 2024, Companies House published updated versions of certain of its forms and guidance, amended to reflect the reforms that came into force on 4 March 2024 (Collection: Companies House guidance for limited companies, partnerships and other company types, Collection: Companies House forms for limited companies and Collection: Companies House forms for LLPs). Companies House also published new guidance and forms relating to the reforms (see FC Feature 4 March 2024).
Companies House and company law reforms in force on 4 March 2024
Regulation 2 brings the majority of Part 1 ECCTA 2023 substantively into force on 4 March 2024. Key company law changes include those set out below.
- Registrar's role and powers – the registrar's new overarching objectives (s 1) and enhanced powers to check, query or reject submitted information and remove information from the register (ss 79 to 85), alongside expanded rectification powers that include the power to change a company's registered office address (ss 105 to 107). The registrar's powers to annotate certain public registers will also come into force (see FC Feature 18 January 2024).
- Registrar's role in tackling criminal activity – the registrar's obligation to analyse information held by Companies House for the purpose of preventing or detecting crime (s 92) and new powers to share information with law enforcement agencies (s 94).
- Greater protection for personal information on the register – s 91 extends the information that can be made unavailable for public inspection (and protected from disclosure).
- Company formation – on incorporation, subscribers must confirm that the company's purpose is lawful (s 2). S 3, which introduces a new statement that the subscribers are not disqualified from acting under the directors' disqualification legislation, has not been commenced.
- Company and business names regime – new restrictions on company names, together with new enforcement powers for the registrar (ss 8 to 26).
- Company addresses – the requirement for a registered office to be an 'appropriate address' and for companies to register and maintain an appropriate email address (ss 28 and 29).
- Confirmation statement regime – changes include new and expanded duties to deliver certain information to the registrar at the same time as the annual confirmation statement, including a statement confirming the company's intended future activities are lawful (ss 59 to 63).
- Increased civil and criminal sanctions to reflect new obligations – these include a new aggravated offence for delivering false statements to the registrar (s 102) and a new civil penalties regime allowing the registrar to impose a financial penalty for many CA 2006 offences (s 104).
- Directors and disqualification – a director will cease to hold office if disqualified under the disqualification regime (s 40). S 31, which expands the grounds on which a director can be disqualified to include persistent breaches of certain companies' legislation, has not come into force.
- Register of overseas entities – extensive changes to the Economic Crime (Transparency and Enforcement) Act 2022 to make the ROE more effective and increase transparency in relation to trusts.
Significant reforms that are not coming into force include:
- the identity verification regime;
- abolition of the requirement for companies to keep certain statutory registers (s 51 and Schedule 2);
- changes to the information about members that companies must submit to Companies House (s 50) and other new membership information requirements;
- changes to the CA 2006 regime for annual accounts (ss 53 to 58); and
- wide-ranging changes to partnership law in Part 2 ECCTA 2023.
Transitional provisions
Regulation 5 provides that the duty to confirm a company's lawful purpose will apply to the first confirmation statement filed at Companies House which has a confirmation date after 4 March 2024. Other transitional arrangements in Regulation 6 apply to the expanded definition of registrable beneficial owner for the purposes of the ROE.
FC Q&A and Legislation are being updated to reflect these changes coming into force. For an overview of the key corporate law reforms in ECCTA 2023, see FC Overview 9 November 2023.
First published on the Corporate News Service on 1 March 2024.
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