Economic Crime and Corporate Transparency Act 2023 – Update February 2024

Companies House gives insight into how it will use its strengthened powers

Helen Mather, Partner

Companies House has shared some insights on its blog within the last few days relating to how it envisages using the new and enhanced powers it has under the Economic Crime and Corporate Transparency Act 2023 (ECCTA) to query and challenge information filed with Companies House.  These new and enhanced powers (which are just some of the reforms being brought in by ECCTA) are expected to be introduced in March 2024. Given the introduction of these new powers is imminent, the information Companies House has provided is to be welcomed.

The proposed changes include granting Companies House broader powers to verify, scrutinise, reject and remove information in attempt to limit the inclusion of false, misleading or incorrect information on the Companies House register which can be used to facilitate crime.

As it stands, Companies House currently maintain a register of company information, which is available for public view, but it has limited powers to query or correct information on the register.

Under the ECCTA, Companies House will have more robust powers allowing them to query, examine, decline and potentially remove information which appears incorrect or inconsistent. Companies House will have the power to do so in respect of both filings that:

• are yet to be accepted and published on the register; and
• have already been accepted and published on the register (including information published before the new ECCTA powers come into effect).

Via its blog Companies House has explained that in deciding how to use its new powers, it will be guided by the key objectives introduced by ECCTA namely:

1. To ensure that anyone who is required to deliver a document to the registrar does so (and that the requirements for proper delivery are complied with)
2. To ensure information contained in the register is accurate and that the register contains everything it ought to contain
3. To ensure that records kept by the registrar do not create a false or misleading impression to members of the public
4. To prevent companies and others from carrying out unlawful activities, or facilitating others to carry out unlawful activities.

Companies House have also confirmed that the queries it raises in relation to information will derive not just from its own internal investigations but also from information it is provided from third parties alerting it that there are questions to be answered relating to the information on the register.

Companies House does however, recognise that it will not have the resources to be able to act on all the information it receives. Companies House has confirmed it intends to focus on issues that pose the biggest risk to the integrity of the register and will use the above objectives to help it decide what to focus on.

Companies House have also helpfully provided some initial guidance as to what companies can expect will happen procedurally and how Companies House will interact with companies as it uses its new powers. Companies House has indicated that:

• It will first raise a request for further information. It has given the examples that it could ask questions about a share capital figure that seems too high or the age of a director that seems unusual. Companies House advises that it is important that companies respond promptly to these initial requests for information.
• The initial query, may then escalate to a formal query for information if there is no response or the response provided is insufficient. Under a formal query, a company will have 14 days to respond and failure to do so will be a criminal offence, which can result in a fiscal penalty and/or prosecution.

Companies House is already committing significant resources to the implementation of ECCTA and seems keen to hit the ground running when the first of the new changes come into effect in March  – it explains in the blog that it has to date spent 24,000 hours training 730 members of staff.

Companies House are clearly feeling optimistic about the changes being brought in and have said in the blog that it expects these changes coupled with its enhanced powers to share information with law enforcement and government agencies, to “make a big difference to the integrity of the information on the register – and to individuals and companies who have been impacted by false, misleading or incorrect information”.

No doubt over time, the reforms under the ECCTA will improve the integrity of the Companies House register significantly. It remains to be seen how the powers are implemented in practice. For now, it is helpful to have some guidance from Companies House ahead of the first batch of changes coming in as to how these powers will be exercised and what companies can expect in practical terms.

If you have any questions in respect of the proposed changes within the ECCTA and you would like to speak to a member of our expert Corporate team, please contact us on 0161 832 3434.