Changes to company law: what businesses need to know

Initial changes to company law – including the biggest changes to Companies House since it began – have started to take effect. Here, our corporate & commercial team highlight the key reforms that businesses need to know.

In October 2023, The Economic Crime and Corporate Transparency Act 2023 (ECCTA) received royal assent. The act introduced comprehensive changes to company law, marking a significant boost in the powers of Companies House to tackle economic crime and support economic growth.

The ECCTA will be implemented in a piecemeal fashion, with certain reforms having taken effect from 4 March 2024 (dependent on parliamentary timeframes, as some will require secondary legislation).

What’s new?

There has been an increase in the registrar’s powers to scrutinise information. An overriding principle of the ECCTA is to promote accuracy and improve the quality of the material held at Companies House, thus endorsing it as the gatekeeper of accurate company information.

To fulfil this role, the registrar is to be given increased powers to scrutinise and reject information that appears inconsistent with that already on the register. Companies House will take a vigorous approach to querying inaccurate or misleading information, and may even remove inaccuracies that were already on the register before new measures came into effect.

Companies House will also have the authority to conduct checks on company names that give a disingenuous impression to the public, and to prohibit company names that could potentially be used fraudulently or for the purposes of criminal activity (for example, if a company name implies a connection to a government body where no such connection exists).

Annotations on the register

As mentioned, Companies House may formally query information that it has identified as needing clarification by requesting information and supporting evidence, which companies will need to respond to within 14 days. Companies House have assured that there will be serious consequences to companies that do not respond to formal queries – non-compliance may include prosecution and financial penalties.

Where Companies House has queried information but has not received an adequate response, it will be able to annotate the register to let those who visit Companies House know that there are potential issues with the information.

Registered email address and office address

Under the ECCTA, every company must provide an ‘appropriate’ registered office address, meaning one where correspondence can be sent that would:

• be expected to come to the attention of a person acting on behalf of the company (a director, for example)
• be capable of being recorded by obtaining an acknowledgement of delivery.

In an additional requirement (that’s been in force since 4 March), all companies will be required to provide Companies House with a registered email address, which will not be publicly available. The expectation is that Companies House will use the email address to correspond with the company in respect of updates and reminders. Emails sent to the address must come to the attention of those acting on behalf of the company.

Companies incorporated on or after 4 March will be required to supply an email address on incorporation. Existing companies will need to provide this when filing their next confirmation statement (when due after 4 March).

Statement of lawful purpose

On the incorporation of a new company, subscribers will need to confirm that they are forming the company for a lawful purpose. Confirmation statements from 5 March 2024 onwards will also require the company to acknowledge that the intended future activities of the company are lawful.

Do I need to do anything?

The application date for some of these measures is fast approaching (subject to implementation of secondary legislation) and it’s important to be mindful of the comprehensive scope of the ECCTA.

Companies should therefore consider taking steps to:

• identify any inaccuracies or omissions in the information they have provided to Companies House
• review the registered office address to ensure compliance, noting that PO Boxes will not be permitted under the ECCTA
• identify an appropriate email address and ensure that processes are in place so that the email address is maintained by relevant people.

For more information, you can visit Changes to UK company law, which offers practical advice on what you can expect over the coming months.

If you have any questions relating to the changes or any other query, please don’t hesitate to contact our expert team.

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