The new Economic Crime & Corporate Transparency Act 2023 has brought about some important changes for UK corporate entities and their officers. It is essentially aimed at preventing fraudulent crime and strengthening compliance programmes.
Let’s be honest (pun intended), we would all expect that a business operates transparently. However, with a recent surge in economic crime, Parliament have, through the Act, introduced a new criminal offence of failing to prevent fraud. Corporations can now be held criminally liable in their own right for failing to stop their employees, agents, or those acting on their behalf, committing fraud.
This offence only applies to “large organisations” which are defined as corporations who meet two out of three criteria: having a turnover of more than £36 million, having more than 250 employees, or having a balance sheet total of more than £18 million. If your company, LLP, or limited partnership falls into the category of a large organisation, then take note, because failing to prevent fraud is an offence of strict liability, meaning that even if there was no intention on the part of your corporation to commit an offence, it may still be found guilty.
The Act also introduces measures, to be carried out through Companies House, with the aim of improving corporate transparency and preventing abuse of company registers, including the following:
- Identity verification – Those individuals who set up, control or file on behalf of newly incorporated and existing corporations will need to have their identity verified.
- Registered office – A corporation will have to have an “appropriate” registered office address, meaning that PO boxes are no longer allowed.
- Abolishment of certain company registers – Whilst a register of members is still required for companies, registers of directors, directors residential addresses, secretaries and persons with significant control will no longer be required. The intention here is that there will be a central register of the company maintained by Companies House.
- Confirmation statements and email addresses – From March 2024, corporations will need to provide a registered email address when filing their confirmation statements, as well as supplying a full shareholder list (where applicable).
- Accounts – Filing accounts will, over time, be moved to a software-based filing only, and small and micro-entity companies will be required to file their profit and loss accounts.
Companies House have generally been afforded greater powers to query, scrutinise, and reject information that seems incorrect or inconsistent, whilst further being able to annotate the register of a corporation to let public users know about potential issues with the information supplied.
As at the 3rd January 2024, we have not been informed when the majority of the above measures are expected to come into force, and so even if you think you might be affected, you do not need to do anything differently just yet. We await sight of an implementation timetable from Companies House, so watch this space for further updates.
In the meantime, if you have any concerns about any of the upcoming changes to Company Law, or would like to discuss them in further detail, please contact any member of our Corporate Department on 01484 821500 or fill out our online enquiry form to request a callback.
The above article is for illustrative purposes only and does not constitute legal advice. It is recommended that specific professional advice is sought before acting on any part of the information given.