Associate, Olivia Lewis, discusses the Economic Crime and Corporate Transparency Act 2023 (ECCTA)

At Bray & Krais, we appreciate the importance of privacy and anonymity for our clients. In this article, we explore a key piece of new legislation that, in some instances, seeks to help individuals to preserve that privacy, while balancing the need to create a more transparent and reliable company register.

In October 2023, the new Economic Crime and Corporate Transparency Act 2023 (the “ECCTA”) was given its royal assent and became law. The ECCTA’s overall objective is to prevent abuse of UK corporate structures and tackle economic crime, and one of its main methods for doing so is by increasing the transparency of UK corporate entities and enhancing the role of Companies House.

The ECCTA also provides individuals with increased opportunity to maintain their privacy, by amending the limited circumstances in which individuals may apply to protect and suppress their personal information that is ordinarily required to be made publicly available on Companies House.

Protecting Personal Information

Any individual listed on the Companies House register will be able to apply to have their personal information protected from public view. Such information includes the following:

1. residential address;
2. signatures;
3. business occupation;
4. day of date of birth;
5. name (or in most serious cases, all required particulars) where evidence is provided that an individual is at serious risk of violence or intimidation; or
6. sensitive addresses where evidence is provided that the residents are at serious risk of violence or intimidation.

It is envisaged that further regulations will be enacted to clarify who may make an application and the grounds on which an application may be made.

Companies House – Increasing Transparency & Reliability

The ECCTA’s main objective is to tackle economic crime and prevent abuse of corporate structures. One of the ways it seeks to do this is by strengthening Companies House’s powers and creating stricter rules and requirements for companies regarding the public register. It is hoped that this will result in a more transparent and reliable register at Companies House.

The following changes apply to newly incorporated and existing companies, and took effect from 4 March 2024:

1. Companies House will have greater power to query information – if the register believes that information is incorrect or inconsistent with information already on the register, then it may reject, and in some cases remove, such information.

2. Company names – company names will be subject to increased scrutiny. Currently, there are limited circumstances in which a company may be prevented from using a certain name, including if a name is too similar to an existing one, or where the register has received misleading information to enable a company name to be registered.

   The new legislation will allow the register to refuse to incorporate a company where, it is of the Secretary of State’s view, the name would facilitate certain crimes. The register will also be able to reject names which contain computer code.

3. Registered office addresses – companies will be unable to use a PO Box as their registered address.

4. Registered email address – all companies must provide a registered email address, either on incorporation or in their next Confirmation Statement.

5. Confirmation of lawful purpose – on incorporation, companies must confirm that they are forming the company for a lawful purpose. Every year, each company must confirm in their Confirmation Statement that its future activities will be lawful.

Identity Verification – Directors and PSCs

Companies House will introduce a requirement for directors and persons with significant control (“PSCs”) to verify their identity. This will be compulsory for all UK corporate entities and will apply to all new and existing company directors, PSCs and anyone else filing documents at Companies House. Further details of the verification process are yet to be released.

Limited Partnerships (“LPs”)

Both new and existing LPs will also be subject to more stringent registration requirements, including requiring more detailed information about partners. LPs will also have to maintain a registered office in the UK to demonstrate a firm connection with the UK. Companies House will have the power to deregister any LPs which have dissolved or no longer carry-on business. Further details are yet to be released.

If you have any questions on how these changes may affect you or your business, then please get in touch with the Corporate team at Bray & Krais, who would be delighted to advise you.

Key Contacts: 

Joseph Davis, Senior Associate – joseph@brayandkrais.com

Olivia Lewis, Associate – olivia@brayandkrais.com