The Economic Crime and Corporate Transparency Act 2023 (ECCTA), passed on 26 October 2023, involves significant changes to UK law. This legislation, introduced by the UK Government, aims to combat economic crime and enhance transparency around corporate entities.
These changes will impact companies of all sizes, introducing new responsibilities for a range of individuals, including both new and existing company directors, people with significant control of a company (PSCs), and those who file on behalf of a company with Companies House. This blog post highlights some of the key changes introduced by this new legislation, though it’s worth noting that there are additional provisions in place.
Blog post written by Chamber Member, Preiskel & Co LLP.
Firstly, there will be significant reforms to the role of Companies House, broadening its powers to become a more active gatekeeper of corporate information. These reforms include enhancing its ability to check, remove, or decline information submitted to the register. A new ID verification process will be implemented for all company directors, persons with significant control (PSCs), and those who file on behalf of companies. Additionally, the requirement for certain statutory registers to be kept by companies will be repealed. Companies House will also gain the power to amend fees related to incorporation and annual charges.
All companies will be required to maintain a registered office address that qualifies as an “appropriate address”. This means the address must allow for the receipt and acknowledgment of delivered documents by someone acting on behalf of the company (i.e., PO Boxes will no longer be acceptable). Non-compliance will be punishable by fines and/or strike-off. Similarly, companies must maintain an appropriate email address that will come to the attention of a responsible individual acting on behalf of the company, although this email address will not be made public.
As part of the transition to digital processes, Companies House will no longer accept paper filings for annual accounts. All accounts must instead be filed online using approved software. Reforms will also address partnerships to prevent the abuse of limited partnerships by tightening registration requirements and mandating the submission of more detailed information about the partners.
Law enforcement agencies will be granted expanded powers to seize and recover suspected criminal cryptoassets linked to illicit activities, such as money laundering, fraud, and ransomware attacks, or deemed to be proceeds of crime. Additional intelligence-gathering powers will also be introduced to aid investigations while removing nugatory burdens on businesses.
New measures will require all companies, upon incorporation, to include an express statement affirming that the company’s business purposes will be lawful. This statement must also be reasserted in each confirmation statement. Finally, a new “Failure to Prevent Fraud” offence will be introduced. Under this provision, an organisation will be held liable if an employee or agent commits a specified fraud offence and the organisation did not have reasonable fraud prevention procedures in place.
Which companies will be impacted?
ECCTA generally applies to all entities registered with Companies House, including private limited companies, public limited companies (PLCs), limited liability partnerships (LLPs), limited partnerships (LPs), community interest companies (CICs) and overseas companies.
Which are the timings and next steps regarding this?
The first set of changes under the ECCTA came into effect on 4 March 2024, with the remaining changes scheduled to be implemented throughout 2024 and 2025.
For more information on the changes, please see the Government website here.
Please contact Ronnie Preiskel or Karthyaeni Vittala on any questions on the above or how to prepare.
The material in this article is only for general review of the topics covered and does not constitute legal advice. No legal or business decision should be based on its content.
This article is written in English language. Preiskel & Co LLP is not responsible for any translation of all or part of its content into any language.
