The Economic Crime and Corporate Transparency Bill, currently going through parliament, impacts
company directors, secretaries, and people with significant control.
The move gives Companies House greater powers to check information on the companies register, and
enhanced ability to work with law enforcement and other bodies tackling fraud. It’s described as the
‘biggest upgrade’ at Companies House in 170 years, but the new legislation doesn’t just apply to UK
companies. Other legal entities, such as limited partnerships – including Scottish limited
partnerships, and limited liability partnerships, are also within scope.
Of particular importance are rules requiring new and existing directors to verify their identity.
People with significant control and anyone else filing with the Registrar will also need to verify.
Restrictions are imposed on the use of corporate directors.
New accounts-related requirements come in, too. The option to file abridged accounts will be removed,
so that all small companies will have to file a profit and loss account and directors’ report.
Micro-entities will also be required to file a profit and loss account. Companies, including dormant
companies, relying on audit exemptions will need to make an eligibility statement, and in due course,
digital filing and full tagging of financial information in iXBRL format will be mandated.
The Bill sets out to modernise the law governing limited partnerships, including Scottish limited
partnerships. This will bring stricter registration requirements; the need for limited partnerships
to maintain a connection to the UK; and increased transparency. The Registrar will be able to
deregister limited partnerships in certain circumstances, for example where they are no longer
carrying on a business.
It’s all part of a much bigger picture: the ongoing drive against criminal abuse of corporate
structures for fraud, terrorism and money laundering purposes. It’s also part of the government’s bid
to stop the use of the UK as a safe haven for ‘dirty money’ following the invasion of Ukraine. The
logic is that more enforcement powers, more compliance checks, more requirements to make financial
information available to the public, make a more transparent business environment. And a more
transparent business environment makes it harder for criminals to hide.
As yet, there is no start date for these provisions. They are likely to be introduced in stages,
but it would make sense to consider now how to deal with the changes coming. We should be happy to
discuss this with you further.