Insights

Following from the introduction of the Economic Crime (Transparency and Enforcement) Act 2022, the Government has now issued a White Paper on Corporate Transparency and Register Reform, setting out the final position on various changes which are intended to be implemented through legislation.We set out below a summary of the main announcements but in the meantime please speak to your usual Statura contact should you wish to discuss the content of this document in more detail.

The reforms will tend towards more transparency and efficiency, with changes particularly affecting the following areas:

• Powers of the Registrar
• Financial information
• Corporate directors.

More powers to the Registrar

Companies House is currently required to accept in good faith any document which is sent to them, and to publish them on the register.

During a consultation in 2019, strong support was received for the option to grant the Registrar with the power to actually query a document, ask evidence to support it and even, eventually, to reject the filing. Companies House will be able to require information on a discretionary, risk-based approach.

There will also be a more substantial sharing of information with law enforcement, other government bodies and the private sector, in order to quickly identify any discrepancy between information filed and that which is held by other bodies.

At the same time, measures will be implemented to enhance privacy mechanisms. For example, there will be a process to obtain removal of personal details when they had been filed in the past but are no longer necessary, or information that put the individual at risk of harm.

Finally, a new identity verification process will be implemented for directors, beneficial owners and agents. Such service will be carried out by a third party service provider.

Improvement of financial information

There will be important changes in relation to financial information filed to Companies House. In particular:

• Company accounts will have to be filed in digital format using iXBRL (Inline Extensible Business Reporting Language). Accounts will also have to be “fully tagged” (i.e. each element will need to have its proper label). This will allow Companies House to quickly check the information provided and, if needed, to easily query it (in line with the further powers granted to the Registrar).
• Filing options for small companies will be reduced to just two: small and micro companies accounts. It will no longer be possible to file abridged and “filleted” accounts, in order to simplify the framework and improve transparency.
• All small companies will also be required to file a profit and loss account, to ensure more transparency and allow consumers and creditors to take informed decisions.
• Dormant companies will be required to file an eligibility statement, which will include additional information useful for the Registrar to tackle false filings.
• A reduction of the time allowed to prepare and submit accounts (currently nine months from the end of the reporting period for private limited companies and six months for public companies) has also been considered by the Government, but no changes will be made at this time.

Restriction on corporate directors and officers

A ban on corporate directors will be implemented, with exceptions when all directors of the company that should act as corporate director are themselves natural persons and those natural persons are subject to an identity verification progress.

There will be different rules for Limited Liability Partnerships, whose corporate members will need to provide information of their directors or managing officers for verification purposes.