What is the Economic Crime and Corporate Transparency Act 2023

What is the Economic Crime and Corporate Transparency Act 2023 and how does it affect you and your business?

The Economic Crime and Corporate Transparency Act 2023 (ECCTA) passed through parliament and became law in the latter part of 2023.  The legislation has introduced new obligations and limitations for businesses across a variety of different areas. The legislations main objectives are to tackle economic and financial crime.

Under the new legislation, Companies House will take a more proactive role in the regulation of businesses in the UK, with the aim to make their structure and actions more transparent. Companies House will introduce a new identification verification requirement for new directors and existing directors. A director will not be able to act as a director unless their identity has been verified. People with Significant Control (PSCs) and people providing documentation to Companies House will also be subject to these identification verification requirements. If the identification requirements are not complied with, there will be consequences with a new offence being introduced.

The Registrar of Companies now has advanced powers to query, reject, amend or remove information from the companies register. The Registrar will also be able to raise queries in relation to any information provided to Companies House and will be able to share information with regulators and public authorities.

Once implementation is complete, Companies will no longer be required to maintain their own local register of directors, register of secretaries or register of PSCs. However, the need for a local register of members shall remain in force. Companies House will instead hold verified data in place of these registers.

Another change is that the companies registered office must be an ‘appropriate’ address which means that documents can be delivered by hand or post to the address and be given to a person acting on behalf of the company. Therefore, addresses such as PO Boxes will not be appropriate. Similarly, a company will have to ensure that its registered email address is also an ‘appropriate’ email address. Should there be a change to the registered address or email address, notice must be given to the registrar, along with a statement that the new address is an appropriate address/email address. If these are not complied with, an offence is committed by the company and every officer of the company who is in default.

Accounts provided to Companies House have also been affected by the ECCTA, with some focus being made on small companies. Small companies will no longer be able to file abridged accounts and will be required to file audited annual accounts unless they benefit from an audit exemption. If a company is exempt, this will need to be stated on the balance sheet with confirmation that the company qualifies for the exemption.

These are just some of the many changes and restrictions introduced by the ECCTA to tackle economic and financial crime. The changes introduced by the ECCTA will be implemented over 2024 in a series of commencement orders, to allow time for companies to adjust to and comply with the changes.

For any further information please contact Sasha via email - sbrady@biscoes-law.co.uk or call our commercial team on 023 9266 0261