Changes to UK company law under the Economic Crime and Corporate Transparency Act will be rolled out over the next few years. The first set of measures will take effect from 4 March 2024.
These changes bring new responsibilities for company directors, people with significant control (PSCs), and anyone who is required to file on behalf of a company or LLP.
In this article, we outline the key measures and what these reforms might mean for you.
New rules for registered office addresses
The introduction of new rules for registered office addresses is one of the most notable changes. From 4 March 2024, all companies will be required to use an ‘appropriate address’ as their registered office.
An appropriate address is one where any documents sent to the address should be expected to come to the attention of someone acting on behalf of the company and be recorded by an acknowledgement of delivery.
Many existing companies will already satisfy the new registered office requirements. However, these changes will affect those using a PO Box as a registered office address.
Any company currently using a PO Box address for such purposes will need to change their registered office by 4 March to avoid being struck off the register.
Where a company is identified as using an inappropriate address after this date, Companies House will automatically change its registered office to a default address. The company will then have 28 days to provide an appropriate address before steps are taken to strike off the company.
Other address services provided by third parties (e.g. company formation agents and accountants) will be unaffected, as long as those addresses satisfy the new rules.
Changes to company filings
Under the new measures, there will be an obligation on all companies to confirm that their intended future activities will be lawful. This will be included as part of the annual confirmation statement.
Additionally, all companies will need to supply a registered email address to Companies House. From 4 March, new companies must give this information during the incorporation process, whilst existing companies will be required to provide a registered email address on their next confirmation statement from 5 March onwards.
Companies House will only use the email address to communicate with the company. This information will not be made available on the public register.
There will also be changes to the way companies file their annual accounts, with Companies House transitioning toward filing by software only. This will be phased in over the next couple of years, although the exact timetable is yet to be confirmed.
The aim of this move is to ensure more efficient and secure annual accounts filings for companies whilst simultaneously improving the quality of information held on the register.
To comply with the new filing requirements, companies will need to find suitable accounting software before the removal of existing web-based and paper accounts filing methods.
Several other changes to accounts will also be introduced in the next few years:
- Small and micro-entity companies will need to file a profit and loss account
- Small companies that don’t qualify as micro-entities will be required to file a directors’ report
- Filing ‘abridged’ accounts will no longer be an option
- Any company that claims an audit exemption will be required to include an additional statement by the directors on the balance sheet
- There will be a limit to the number of times a company can shorten its financial year (the ‘Annual Accounting Period’)
Further information on these measures will be released in due course, following their finalisation in secondary legislation. Companies will be given sufficient warning and guidance before the changes come into effect.
Information on the Companies House register
Improving the quality of data on the public register is one of the key aims of the changes to UK company law. To achieve this, Companies House will be equipped with greater powers to query any information that appears to be incorrect or inconsistent.
The misuse of company names will be tackled, with stronger checks being carried out on names that may mislead or give a false impression to the public.
Companies House will also use annotations on the public register to clarify or highlight potential issues with information supplied by particular companies.
Additional steps to clean up the register will be achieved by the use of data matching. This will enable the registrar to quickly identify and remove inaccurate information.
The introduction of a new identity verification process will also help to deter individuals from using companies for illegal purposes. The requirement to verify identity will apply to any person setting up, owning, running, or controlling a new or existing UK company or limited liability partnership (LLP).
Companies House aims to introduce some of these changes on 4 March. However, this date is dependent on the passing of secondary legislation.
Further information on changes to UK company law and the implementation timetable of the new measures is available from GOV.UK.
Get in touch
Please get in touch if you need clarification on any aspect of these changes in company law.