Corporate Transparency and Register Reform – Companies House to Become an ‘Active Gatekeeper’ Under New £83m Programme
Thursday 5th May 2022
Following a consultation in 2019, the Government published a White Paper on corporate transparency and register reform on 28th February 2022.
The aims of the reform are to enhance the role and powers of the Registrar of Companies House for England and Wales (and its equivalents in Scotland and Northern Ireland) and increase the transparency of UK corporate entities.
The proposed reform is part of the Government’s Economic Crime Plan. The hope is that it will help the UK tackle threats to national security, anti-corruption and organised crime and protect individuals and businesses from fraud whilst at the same time boosting enterprise by making the Registrar more reliable and fit for the future.
The key proposals are summarised below.
Enhanced Role and Powers of the Registrar
The Registrar is required to register company information and make it publicly available. Under the reform, the Registrar will be given a new role – it will be responsible for promoting and maintaining the integrity of the public register.
To assist with its new role, the Registrar will be granted discretionary powers to query both information already on the register and new information filed using a risk-based approach. It will be able to remove inaccurate information from the register and impose sanctions on legal entities that fail to respond to its queries. The range of sanctions is still being considered.
The Government predicts these changes will help make the data available on the register more reliable and result in a crackdown on fraud and money laundering.
Identity Verification Checks
There will be a new requirement for those setting up, managing, and controlling companies to verify their identity at Companies House through a new digital identity service. This includes company directors, Persons with Significant Control and directors of Relevant Legal Entities, members of limited liability partnerships and anyone else submitting filings on behalf of an entity.
The Registrar is currently working on identity verification technology. It is anticipated that the relevant individual will need to submit a photo along with a copy of their passport or driving licence.
Ban on Corporate Directors
The idea of banning corporate directors was first introduced by the Small Business, Enterprise and Employment Act 2015 but the relevant provisions have not yet been implemented.
Under the reform, corporate directors will be prohibited unless they are registered in the UK and all the directors of the corporate director are natural persons whose identities have been verified.
Corporate members of LLPs and corporate general partners of LPs will not be subject to the same restrictions, for now, however, those entities will have to provide details of their directors or managing officers who will need to have their identities verified.
Data Sharing Powers
The Registrar will be given new powers to share information it receives with other public and regulatory bodies and cross-reference data with data held by both public and some private bodies with a view to increasing the efficiency and effectiveness of the processes put in place to prevent fraudulent activity.
We await an official timescale for the implementation of the changes and guidance on how they will work in practice. The new powers will have significant implications for the way entities are administered in the UK and we should expect operational changes at Companies House.
