A lot has happened in the world since corporate transparency and the inadequacies of Companies House were brought into the spotlight by the imposition of sanction regimes. Parliament vowed to change how Companies House operated by improving transparency and hopefully limiting abuses, but it takes time for proposals to become statute on the books and even longer for them to be implemented.
We are, however, finally reaching the stage when the changes start to bite and when operators need to start thinking about how they will change their Companies House processes like incorporation, filing confirmation statements and amending details.
In addition to the increases in filing and administration fees, the part of the Economic Crime and Transparency Act 2023 which will probably be most immediately obvious to directors, shareholders and their advisors are the changes to identity verification. What follows is a summary of those changes. Note that there is already in place a new requirement since the beginning of March to have details of the main contact for each company registered at Companies House.
Identity verification
It was a bit of a flaw under the old Companies House regime that incorporating a company required little to no verification. We heard stories of companies with Mickey Mouse as a shareholder or Ronald McDonald as director, etc.
This has now been corrected to align with other anti-money laundering and similar routines to which we are now accustomed for things like setting up bank accounts (or indeed instructing solicitors).
“In the future” (Companies House’s words) Ronald and Mickey will have to have their identity verified either by Companies House itself through a GOV.UK One Login or by a verified third-party provider before they can be linked to a company at Companies House. From 8th April 2025, they may do so voluntarily.
Identity verification will now be compulsory for:
- new directors and people with significant control (PSCs)
- existing directors and PSCs; and
- anyone acting on behalf of a company.
Who can file?
You will not be able to file anything at Companies House or incorporate a new company unless you are verified or operate via an “Authorised Corporate Service Provider” who has themselves verified your identity.
Anyone whose ID has been verified at Companies House and who is not disqualified can make filings on their own behalf. LLPs with tens or hundreds of partners may, for example, just find it easier to have each partner identify themselves at Companies House rather than have a nominated individual deal with it or use an Authorised Corporate Service Provider, the same is true of small companies with one or a handful of shareholder directors.
It is not currently clear what form the ID checks performed directly by Companies House through the GOV.UK One Login will take but it is likely that they will follow other digital ID check platforms. There is an official GOV.UK ID Check app which has a respectable rating on the Apple App Store at least (4.7/5 stars with more than 100,000 ratings). That should mean that the Companies House checks could be quite streamlined for an individual, if perhaps more intrusive than one might otherwise like.
If not wanting to verify digitally, it is possible to verify identity at a Post Office branch that offers ‘in branch verification’.
Authorised Corporate Service Providers
The following can make filings on behalf of another person:
- an officer or employee of the firm who has verified their identity; or
- an Authorised Corporate Service Provider.
Note here that the officer or employee filing must be an officer or employee of the actual entity which is filing. So, a group company secretary cannot file on behalf of a subsidiary unless they are either an officer or employee of that subsidiary.
As regards third party “Authorised Corporate Service Providers”, under the new regime they are able to verify ID and relay that verification (though not necessary the ID itself) to Companies House. These Authorised Corporate Service Providers are individuals or organisations that undertake Anti-Money Laundering supervised activity, such as:
- company formation agents
- solicitors
- accountants; and
- chartered secretaries and governance professionals.
The point to note here for those kinds of professional services providers who are used to helping clients with routine filings or the incorporation of companies is that (1) they will have to have verified the ID of their clients and (2) they will have to be registered with Companies House as an Authorised Corporate Service Provider.
To become an Authorised Corporate Service Provider, agents must be supervised within the UK by one of the relevant Anti-Money Laundering supervisory bodies like the FCA, the ICAEW and the SRA. The agent must then register with Companies House and provide their requested information about the business.
If wishing for their business to become an Authorised Corporate Service Provider, a senior member of the business must apply to Companies House and verify their own identity, provide information about the business and pay a £55 fee. Once authorised, the Authorised Corporate Service Provider will be able to add other members of their organisation who will be able to operate on Companies House on others’ behalf without undergoing the same identity verification process.
Other notable changes for professionals and practitioners
New statements
In addition to the enhanced verification requirements, on incorporating a company the application will have to affirm that:
- the company is being formed for lawful purposes; and
- none of the proposed shareholders, directors or PSCs have been disqualified as directors.
It is unclear at this stage what additional burden this second requirement will place on third parties incorporating companies for clients. Will the third party be entitled to rely on their client’s assurances that no individual is disqualified, or must they conduct their own investigations? Either way, third parties would be wise to seek assurance that their client is indeed forming a company for a lawful purpose and intended to continue only a lawful purpose and that none of the parties are disqualified.
Companies House is now allowed to follow a sanctions and financial penalty process if they discover that the company is not operating for lawful purposes only.
Appropriate registered office and email address
Under the new rules a company’s registered office must be at all times at an ‘appropriate address’. This means an address where, in the ordinary course of events:
- a document addressed to the company, and delivered there by hand or by post, would be expected to come to the attention of a person acting on behalf of the company, and
- the delivery of documents there is capable of being recorded by the obtaining of an acknowledgement of delivery.
Like the above, a company must ensure that the email address it has registered with Companies House is an ‘appropriate email address’. This means an email address where, in the ordinary course of events emails sent to it by the Registrar would be expected to come to the attention of a person acting on behalf of the company.
Company accounts
Companies House claim that they are “streamlining” the options for filing accounts for small and micro-entity companies. Micro-entities will now need to file a profit and loss account and a balance sheet. Small companies that are not micro-entities will now need to file a profit and loss account and a directors’ report in addition to the balance sheet. There will also no longer be the option to file ‘abridged’ accounts.
Whilst smaller companies would likely have produced these accounts privately anyway, the most immediate implication of this change is that this information will now be publicly available on the register as it is for larger companies.
Statutory registers
In our experience it often comes as a surprise to owners and managers of companies that they are legally required to keep formal statutory registers recording things like shareholders, directors and their addresses, secretaries and persons of significant control. Many are unaware of this and do not keep the statutory information.
That is soon going to less of a concern because those internal registers are to be abolished. A company will now only be required to keep a register of shareholders which will still be the absolute legal record of who owns shares in the company.
Of course, the reason for this change is that the information will instead be stored and verified at Companies House. So, given that many were not even aware of the need to maintain and store that information, there will be an additional burden of registration at Companies House.
This is only intended to be a summary and not specific legal advice. If you would like further information please contact a member of our team.
