On 24 May 2024, the DBT published a Progress Report on the implementation and operation of Parts 1 to 3 Economic Crime and Corporate Transparency Act 2023 (ECCTA 2023). The company law reforms introduced under Parts 1 to 3 include:
- reforms of Companies House processes and new statutory functions and objectives for the registrar of companies;
- reforms of the laws applying to limited partnerships; and
- new provisions relating to the Register of Overseas Entities (ROE), which was introduced by the Economic Crime (Transparency and Enforcement) Act 2022 (see Overseas companies/Register of overseas entities).
The first phase of reforms came into force on 4 March 2024 and included the majority of Part 1 as well as a number of provisions in Part 3 (see FC Feature 1 March 2024). The Report provides an update on what has been achieved so far in implementing these reforms and sets out the next steps.
Secondary legislation
The Report identifies that 13 statutory instruments implementing the reforms have so far been laid in Parliament. The government plans to deliver further statutory instruments throughout 2024, including a third tranche of regulations before summer 2024. These will:
- specify certain insolvency officeholders with whom the registrar may choose to share targeted information under specific circumstances so as to support those officeholders in the exercise of their public functions;
- enable individuals to protect their usual residential address where it appears on the register in more cases than is currently possible, including where a usual residential address is used as a registered office address in certain cases;
- set out the procedure for identity verification via Companies House or via Authorised Corporate Service Providers (ACSPs), along with the legal test that must be met to qualify as an individual whose identity is verified, and the framework for the suspension and de-authorisation of ACSPs (see FC Feature 23 May 2024);
- enable ministers to designate persons for the purposes of director disqualification sanctions in accordance with the designation process established by the Sanctions and Anti-Money Laundering Act 2018 (see Disqualification of directors, Q&A here);
- expand the ROE protection regime (see Overseas companies, Q&A here) so that any individual whose information may be published or otherwise disclosed in connection with the ROE can apply for that information to be protected from the public (allowing individuals such as parties to a trust, minors or people who lack capacity to have their information protected);
- set out information on who and how to apply for access to trust information that is suppressed from public inspection and held on the ROE; and
- require overseas entities that have a beneficial owner that is another legal entity subject to its own disclosure requirements, to provide Companies House with more information about where ownership and control particulars of the legal entity can be found.
Implementing register and Companies House reforms
The Report states that, in parallel with delivering the reforms that came into force on 4 March 2024, Companies House is continuing with its programme of work to develop system and process changes for the next phases of the legislation, including identity verification and limited partnership reforms. The Report recognises that these reforms will bring significant changes over the course of the next two years and highlights that Companies House will continue to build its capabilities with each phase, ensuring that the right resources are in place. It notes that it has fundamentally overhauled its fees and funding model, which will fund the new and existing functions, as well as additional costs such as funding additional criminal referral to the Insolvency Service.
Subject to the parliamentary timetable and passage of secondary legislation, the Report anticipates that ACPSs will be able to register in winter 2024/25. Identity verification is anticipated to commence during H1 2025 and limited partnership reforms will be introduced during 2026. A full implementation timetable is due to be published shortly.
For further information on ECCTA 2023, see FC Overview 9 November 2023.
First published on the Corporate News Service on 24 May 2024.
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