The Economic Crime and Corporate Transparency Act 2023 (‘ECCTA’) became law in October 2023, with the new requirements regarding statutory register maintenance initially coming into force in March 2024.
This is an important area alongside the Companies Act 2006 for directors of companies as failure to comply with the legislation may result in criminal liability and financial penalties.
What information do you need to provide to Companies House?
In addition to the general Companies House reforms, the Economic Crime and Corporate Transparency Act 2023 includes provisions concerning specific information to be provided to Companies House.
New requirements include the provision of a registered email address and statements to be made upon incorporation of a company and in the confirmation statement (e.g. a statement that the company’s purposes are lawful).
There are also sections which update the existing provisions of the Companies Act and give the Registrar more control in relation to company names, business names and registered offices.
Companies House has also now released updated forms in relation to some of these new powers such as the form RP08 which comprises a request for removal of information from the register.
What are the changes to company registers?
Each company has previously been required to maintain:
- a register of directors and their residential addresses
- a register of secretaries, and
- a register of persons with significant control.
The Economic Crime and Corporate Transparency Act 2023 will eliminate the requirement for companies to maintain these locally. The information will now be held by Companies House and will be updated by a notification to the Registrar.
The Economic Crime and Corporate Transparency Act 2023 places an emphasis on ensuring that the information filed by a company at Companies House is correct and up to date, making it essential that a company complies with the legal filing requirements.
However, the register of members will still be retained by companies and there are changes to the way in which the shareholder details are recorded in order to be more transparent as to the member’s identity.
Under the Economic Crime and Corporate Transparency Act 2023 it will no longer be possible to keep details of a company’s members on the central register maintained by Companies House. Any company that has previously elected to keep its register of members on the central register will need to start keeping its own register of members again.
There will also be a duty on any new and existing members to notify the company of any information changes.
A company’s statutory records also include key corporate documentation such as instruments of transfers, shareholders’ agreements, directors’ service agreements, statutory accounts along with the company’s certificate of incorporation, board minutes, shareholder resolutions and articles of association, all of which should ideally be stored with the company’s statutory registers.
Under the Act, records of decisions taken at a board meeting, for example, are required to be retained for at least 10 years from the date of the meeting.
Measures relating to abolishing the registers mentioned above are not yet in force and will require further legislation. These, together with a new system of identity verification for directors, members of LLPs and persons with significant control, are expected in the near future.
Does Companies House have increased powers?
Companies House now has greater powers to query information on the register and request supporting evidence. These powers are strongly linked to the new Registrar’s objectives introduced by the Act, which include:
- The ability to scrutinise and reject information that seems incorrect or inconsistent with information already on the register and, in some cases, removal of information
- Stronger checks on company names
- New rules for registered office addresses which will mean all companies must have an appropriate address at all times (for example, a PO Box will not be sufficient)
- A requirement for all companies to supply a registered email address
- A requirement for subscribers to confirm that they are forming a company for a lawful purpose upon its incorporation and that a statement be included on each subsequent confirmation statement that the intended future purposes of the company remain lawful
- Making annotations on the register to let users know about potential issues with the information that has been supplied to Companies House
- Taking steps to clean up the register, using data matching to identify and remove inaccurate information, and
- Sharing data with other government departments and law enforcement agencies.
What are the consequences of not complying?
A company that does not maintain up-to-date and accurate registers is committing an offence, with the volume of missing information from the statutory registers determining the level of financial penalty, up to a maximum of £5,000. For example, failure to maintain the register of members could result in a fine of up to £1,000, plus a further sum of £100 per day for each day that the breach continues.
The company and every officer (Director, Manager, Secretary) in default is deemed to have committed an offence and risks damage to the reputation of the company and its officers.
It is important that a company responds quickly to requests for information from Companies House. If a case is escalated to formal query, then there are 14 days to respond to Companies House. A lack of response is classed as a criminal offence and the consequences could be a financial penalty or prosecution.
The Economic Crime and Corporate Transparency Act 2023 amends the Companies Act 2006 to create new offences in relation to provision of information for the register of members. Any person who, without reasonable excuse, fails to notify the company or respond to a request by the company in respect of the information needed to properly record their name in the register of members commits a criminal offence.
An offence is also committed by any person who, without reasonable excuse, provides information that is misleading, false or deceptive in a material particular. Both offences are punishable by a fine or two years’ imprisonment (although imprisonment for a false or deceptive statement is limited to circumstances in which the person knows the information is false).
However, these offences are not yet in force and are dependent on further legislation. On 1 September 2025, the failure to prevent fraud offence will come into force. This will hold organisations and partnerships accountable for any fraud committed by employees or associates.
Many companies will have kept a traditional set of statutory books, often in the form of a ‘combined register’. Keeping statutory books correctly and up to date has always been an important obligation and is critical when shareholders come to sell shares and establishing true ownership, in the exercise of legal rights or when providing evidence during a sale of a company.
The law (section 127 of the Companies Act) states that the register of members is prima facie proof of ownership of the company’s shares and as such a Court will usually ask to see this register as evidence of existing shareholders in disputes.
An incomplete set of records can be costly to set right. It may even be necessary to apply to Court for an order to reconstruct “mandatory” records if they have not been kept correctly. In these circumstances, it would be worth considering reconstructing the statutory registers.
How can you be prepared?
- Consider internal company processes for updating registers – how might they need to change or be updated to reflect (i) the register of directors and PSCs being held centrally, and (ii) the register of members needing to be maintained locally?
- It is a common misconception that Companies House is proof of a company’s share history. Transfers, for example, are not required to be reported until the next annual confirmation statement is due and so the shareholding position is merely a snapshot of the company as of the last filed statement date.
- While the offences relating to the register of members are not yet in force, it is recommended to review the existing register of members to identify any areas where information might be missing or insufficient to comply with the new requirements under the Economic Crime and Corporate Transparency Act 2023. It may be worth obtaining the relevant information from shareholders now where needed.
