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JTC Welcomes First Changes to UK Company Law (ECCTA): 5 Actions to Take

29th Feb 2024
Companies House is aiming to introduce the first set of measures under the Economic Crime and Corporate Transparency Act 2023 (ECCTA) on 4 March 2024, dependent on parliamentary timetables.

The ECCTA gives Companies House the power to play a more significant role in disrupting economic crime and supporting economic growth. Set out below is an overview of the changes that will be introduced, and the steps companies may wish to consider to ensure that they remain compliant:

 

1. Stronger checks on company names

Companies House will have broader powers in relation to company names, including the ability to prohibit names (current or proposed) that could be used to facilitate crime, such as names implying a non-existent connection to a foreign government or institution, or names that contain computer code.
Where a company name may give a false or misleading impression to the public, stricter checks will be conducted; it appears that this will apply to both existing and newly incorporated companies.

Action: check that company names meet the new requirements, and if necessary, change an existing company’s name.

 

2. New rules for registered office addresses

The registered office address listed with Companies House must be “appropriate”. This means that documents sent to the registered office address (i) should be received by a person acting on behalf of the company; and (ii) can be documented with an acknowledgement of delivery. PO boxes are no longer accepted as registered office addresses.
Companies House has made it clear that they will take action against companies who do not have an “appropriate” registered office address. Notably, the provisions enable Companies House to change an incorrect address to a default address. If the company then fails to provide a new and “appropriate” registered office address within 28 days, Companies House may initiate strike off proceedings.

Action: Existing companies that currently rely on a PO Box address should change their registered office address and notify Companies House by 4 March 2024.

 

3. New requirement for a registered email address

Every company will be required to provide an “appropriate” registered email address. Companies House will use this email address to communicate with the recipient about their company; however, the email address will not be publicly available. An email address is considered “appropriate” if emails sent to it by Companies House are expected to reach the attention of someone acting on behalf of the company.

This change requires any company formed after 4 March 2024 to provide a registered email address upon incorporation. Existing companies will also be required to provide a registered email address when filing their next confirmation statement; with a statement date on or after 5 March 2024. Companies must now maintain an appropriate registered email address, just as they do for a registered office; failure to do so is an offence.

Action: Existing companies and those forming new companies should ensure that they have identified an appropriate email address prior to the 4 March 2024 implementation date.

 

4. New requirement for a “lawful purpose” statement

When incorporating, all companies must confirm that they are doing so for a lawful purpose and that their intended future activities will be lawful.
Existing companies must also confirm on their annual confirmation statement that that their future activities will be lawful; this applies to confirmation statements issued on or after 5 March 2024.

Action: Ensure compliance with the law.

 

5. Enhanced powers for the Registrar

Companies House will have greater powers to investigate information that appears to be inaccurate or inconsistent. In some cases, it will be able to clean up the register and remove information that they believe is incorrect, incomplete, false, or fraudulent.

It has also stated it will take a more robust approach to dealing with information that is provided to it, both before and after it is accepted and published on the register. In order to clean up the register, Companies House will begin using data matching to identify and remove inaccurate information, and it will have the authority to annotate the register when information appears to be confusing or misleading; alerting users to known potential issues.

Companies House will also be able to query information that was already on the register prior to these measures taking effect. A “query” begins with a request for additional information and supporting evidence. Companies that are asked for additional information by Companies House should be prepared to respond promptly. If the case progresses to a formal “query” for information and a company still fails to respond, it will be considered a criminal offence, with potential consequences including a financial penalty or prosecution.

Companies House has confirmed that it will give a company 14 days to respond to a formal inquiry.

When Companies House detects false, misleading, or incorrect information, it will be able to remove it from the register faster than it can now. This may eliminate the need for companies to seek court orders to remove duplicated or incorrect information from the register. Companies House plans to share data with other government departments and law enforcement agencies.

Action: Given Companies House’s expanded powers, companies should review information already filed with Companies House for inconsistencies and, where necessary make additional filings. Companies House is already reviewing documents to ensure that registered information is consistent and accurate.

 

JTC welcomes these changes which will eventually lead to increased transparency and more accurate and trustworthy information. The ECCTA represents the most significant changes to Companies House since corporate registrations were established in 1844.

Further changes will be implemented as we progress through 2024, and JTC will provide updates on these. If you require Company Secretarial and Governance services to review your current registrations or assist you in remaining compliant with the ECCTA and company law, please contact Susan Fadil, Michelle O’Flaherty, or Matthew Allen.