ECCTA: Economic Crime and Corporate Transparency Act 2023 (Financial Penalty) Regulations 2024

by | Apr 5, 2024 | Blog, Legal Updates

On 26 March 2024, the Economic Crime and Corporate Transparency Act 2023 (Financial Penalty) Regulations 2024 were published on legislation.gov.uk.

The regulations allow the Registrar of Companies to impose a financial penalty on a person if satisfied beyond reasonable doubt that the person has committed misconduct amounting to a relevant offence under section 1132A of the CA 2006, which was inserted by the Economic Crime and Corporate Transparency Act 2023 (ECCTA). As part of the ECCTA reforms, the Registrar is enabled to impose financial penalties directly (as an alternative to criminal prosecution).

The ECCTA brings in a raft of changes to Company Law, the biggest seen since 1884 when company registrations began. The Government had a number of key aims in bringing into effect ECCTA, namely to:

  • Prevent organised criminals, fraudsters, kleptocrats and terrorists from using companies and other corporate entities to abuse the UK’s open economy.
  • Strengthen the UK’s broader response to economic crime, by giving law enforcement new powers to seize cryptoassets and enabling businesses in the financial sector to share information more effectively to prevent and detect economic crime.
  • Support enterprise by enabling Companies House to deliver a better service to improve the reliability of its data which will help inform business transactions and lending decisions across the economy.

In summary, ECCTA brings in the following:

  1. Introduces identity verification for all new and existing company directors, PSCs and those delivering documents to the Registrar. It also broadens the Registrar’s powers so that it can become a more active gatekeeper over company creation and custodian of more reliable data, including new powers to verify and decline information submitted to it, or already on, the register.
  2. Gives Companies House enhanced investigative and enforcement powers and enables cross-checking of data with other public and private sector bodies. It intends that Companies House proactively share information with law enforcement bodies if it has evidence of filing errors or suspicious behaviour.
  3. Gives greater protection to personal information provided to Companies House to limit the opportunities for fraud. It also legislates to prevent the misuse of corporate entities.
  4. Introduces a new corporate offence of failing to prevent fraud.
  5. Expands the scope of the identity doctrine for economic crime offences.
  6. Includes provisions regarding limited partnerships, cryptoassets, the register of overseas entities and money laundering which are beyond the scope of this note.

Companies House have therefore announced a raft of changes to company law and filings (and increased fees to help pay for the extra work they’re doing!), including:

  • greater powers to query information and request supporting evidence
  • stronger checks on company names
  • new rules for registered office addresses
  • a requirement for all companies to supply a registered email address
  • a requirement for all companies to confirm they’re forming the company for a lawful purpose when they incorporate, and to confirm its intended future activities will be lawful on their confirmation statement
  • the ability to annotate the register when information appears confusing or misleading
  • taking steps to clean up the register, using data matching to identify and remove inaccurate information
  • sharing data with other government departments and law enforcement agencies

New rules for registered office addresses

From 4 March 2024, there’ll be new rules for registered office addresses which mean companies must have an ‘appropriate address’ as their registered office at all times. 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

These changes mean you will not be able to use a PO Box as your registered office address from 4 March 2024. You can still use a third-party agent’s address if they meet the conditions for an appropriate address.

If you’re currently using a PO Box as your registered office address, you’ll need to change it by 4 March 2024.

Registered email address

From 4 March 2024, there’ll be a new requirement for all companies to give a registered email address to Companies House. This email address will not be published on the public register.

From 4 March 2024, new companies will need to give a registered email address when they incorporate. Existing companies will need to give a registered email address when they file their next confirmation statement with a statement date from 5 March 2024.

 

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