New legislation to tackle economic crime and boost corporate transparency introduces major Companies House reforms

These reforms constitute, in the words of the Registrar of Companies, "one of the most significant moments for Companies House in [its] long history". Charitable companies and all charities that interact with Companies House in some way will need to get their heads around the changes.

ECCTA also introduces a new corporate offence of failure to prevent fraud (large charities will need to be aware of this), as well as measures relating to money laundering, crypto assets and limited partnerships.

Companies House reforms

The reforms of Companies House are designed to help tackle economic crime and to make corporate entities more transparent. Reforms include:

• Introducing identity verification for all new and existing registered company directors, people with significant control, and those who file on behalf of companies
• Broadening the Registrar's powers to become a more active gatekeeper over company creation and a custodian of more reliable data, including powers to verify, remove and/or decline information already on or submitted to the companies register
• Measures seeking to improve the financial information on the register so that the register is more reliable and accurate, and reflects the latest advancements in digital technology
• Providing Companies House with greater investigation and enforcement powers, and increasing its ability to share relevant information with law enforcement agencies
• Enhancing the protection of personal information to protect individuals from fraud and other harms

With respect to the timings for the implementation of these reforms, interactions with Companies House will not change immediately. Yet, whilst some measures, such as identity verification, will require system development and secondary legislation before they are introduced, other reforms will come into force sooner, perhaps early 2024, including:

• Greater powers to query, scrutinise, reject and remove information that seems incorrect or inconsistent with information already on the register
• Sharing data with other government departments and law enforcement agencies.

All of these changes will drastically change the nature of interactions with Companies House, and in the meantime we should all expect a transitional, teething period within which Companies House and others get used to the changes.

New corporate offence of failing to prevent fraud

ECCTA introduces this offence, which will be committed by an organisation - it could be a large charity - if an employee or agent commits fraud for the organisation’s benefit and the organisation does not have reasonable fraud prevention procedures in place. The offence only applies to large organisations, which satisfy two of the following three conditions: turnover of more than £36 million; total assets of more than £18 million; more than 250 employees. Timing for the implementation of the offence is not yet known, but it will not be in force until regulations have been published by the Government.

See the Government's Factsheets about ECCTA.

For more information, please contact Shivaji Shiva in our Charities team on 0121 227 3724,or complete the form below.