What this is: ECCTA reforms envisages the biggest overhaul of Companies House (the Registrar) since 1844. The changes under ECCTA will happen in several stages and the first of those changes are being introduced in March 2024.
What this means: We have been closely following the updates on this important UK legislation that will impact every company already registered in the UK and anyone who intends to incorporate a new company.
Focus on Data Accuracy by Companies House
Traditionally, Companies House has been somewhat particular about the timelines for submission of company information but not so much about the accuracy of these submissions. This may have resulted in contradictory, mismatched or even false information making its way to the Registry. We have been told that Companies House records were viewed over 12 billion times by users in the last year alone. Therefore, it is important that the Registry is error-free at all times to support the business community and for law enforcement purposes. To this end, Companies House will turn its attention to querying any data/information in its records that appears to be incorrect. They may also seek supporting evidence for the information provided. They intend to undertake data matching between various records to weed out inconsistencies and false or misleading information. They will also begin stronger checks on the company names.
Starting on March 4, 2024, companies can expect to receive queries, challenges, requests for evidence and annotations on incorrect records as Companies House begins to exercise greater powers granted under ECCTA.
Registered Office Address
The registered office is not just an address used to incorporate a company in the UK. It ought to be fit for purpose throughout the life of the company. PO Boxes are not suitable to use as a registered office address. Companies House guidance below sets out what is considered an appropriate address.
An appropriate address is one where:
- Any documents sent to the registered office should be expected to come to the attention of a person acting on behalf of the company.
- Any documents sent to that address can be recorded by an acknowledgement of delivery.
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These changes mean you will not be able to use a PO Box as your registered office address from March 4, 2024. You can still use a third-party agent’s address if they meet the conditions for an appropriate address.
If a company currently uses a PO Box address or an address that doesn’t satisfy the above criteria, this can be grounds for striking off the company. Where a third-party service provider is used, the necessary controls will need to be put in place by the service provider.
For new companies being incorporated on or from March 4, 2024, these checks will be applied at the time of incorporation.
Furnishing Email Address
Every existing company will need to furnish the email address of the person acting on behalf of the company. This will need to be included in the first Confirmation Statement that falls due on or after March 4, 2024. The email address will need to be maintained in the same manner as the registered office address. It is possible to update or change the email address provided to Companies House. The email address is for Companies House to communicate with the company directly from time to time. A single email address can be furnished for multiple companies and this email address will not be publicly available.
New companies being incorporated on or after March 4, 2024 will be asked to provide this information at the time of incorporation.
Statement of Lawful Purpose
When a new company is being incorporated from March 4, 2024, the subscribers will need to confirm that the company being formed will engage only in lawful activities. All existing companies will need to include this statement of lawful purposes regarding present and future activities in their Confirmation Statement that falls due on or after March 4, 2024.
Companies House has also announced an increase in its fees, effective May 2024.
FAQs
How does ECCTA intend to identify and prosecute fraud and economic offenses?
One of the key aims of ECCTA is to make it easier to identify and prosecute companies, partnerships and senior managers for economic offenses and failure to prevent fraud. This will apply to larger organizations who meet 2 of the following 3 thresholds: (i) More than 250 employees; (ii) more than GBP 36 million turnover; and/or (iii) assets of more than GBP 18 million.
The legislation seeks to include “senior management” who direct a substantial part of a company’s activities as being responsible for the offense and not just the directors. To read more, visit Part 1 of our blog series on ECCTA.
What are the aims of ECCTA’s Companies House reforms?
Companies House, as we all know, has traditionally been the custodian of entity information in the UK. However, the quality of that data is only as good as what the entities themselves furnish to Companies House from time to time.
In order to improve the quality and accuracy of such information at all times, Companies House is enacting a suite of measures to ensure that (i) proper documents are delivered in a timely manner and through approved methods, (ii) there are no inaccuracies in the documents delivered, (iii) that there is no false or misleading information and (iv) any unlawful activities carried out or facilitated by the companies are prevented. To read more, visit Part 2 of our blog series on ECCTA.
How do Scottish Limited Partnerships differ from those formed in the rest of the UK?
There is an important distinction between Scottish LPs and the ones formed in rest of the UK (England, Wales and Northern Ireland). Scottish LPs have a legal personality that is separate to its partners. This means that Scottish LPs can hold assets or enter into contracts in their own right. To read more, visit Part 3 of our blog series on ECCTA.
This article is provided for informational purposes only and should not be considered, or relied upon, as legal advice.
