Companies House is set to roll out the first of many changes to UK company law, starting on 4 March 2024. These major reforms, introduced by the Economic Crime and Corporate Transparency Act, will help to improve transparency, tackle economic crime, and support GDP growth.
In this article, we provide an overview of the upcoming changes to UK company law, including when we can expect them to come into force and how they may impact your limited company or partnership.
1. Requirement to use an ‘appropriate address’ as a registered office
Every company will have a duty to ensure that its registered office is located at an ‘appropriate address’ at all times. The definition of an appropriate address is one where:
- a document addressed to the company, and delivered there by hand or by post, would be expected to come to the attention of a person acting on behalf of the company, and
- the delivery of documents there is capable of being recorded by the obtaining of an acknowledgement of delivery
This change means that a PO Box will no longer be suitable for use as a registered office address. However, other third-party addresses will still be acceptable, as long as they satisfy the above conditions. This includes registered office services provided by accountants, solicitors, and company formation agents.
If any company uses an inappropriate address as a registered office, Companies House will change it to a default address. The company must then provide an appropriate address with proprietary evidence within 28 days. Otherwise, Companies House may start the process to strike off the company.
Who will this affect?
This change to UK company law will apply to all limited companies, limited liability partnerships (LLPs), limited partnerships (LPs), and Sottish limited partnerships (SLPs) registered in the UK.
When will this change happen?
The new registered office requirements will apply from 4 March 2024. If you need to change your registered office to satisfy this new measure, we would urge you to do so as soon as possible.
2. Duty to provide a registered email address
Companies will have a duty to provide an appropriate registered email address to Companies House. These details will not be made publicly available – Companies House will only use the email addresses for communication purposes.
An email address is considered appropriate if, in the ordinary course of events, emails sent from Companies House would be expected to come to the attention of someone acting on behalf of the company.
New companies must provide a registered email address during the incorporation process, whilst existing companies will be expected to include this information on their next confirmation statement.
Who will this affect?
The requirement to provide a registered email address will apply to all UK limited companies, limited liability partnerships, limited partnerships, and Scottish limited partnerships.
When will this change happen?
The rule will apply to new company incorporations from 4 March 2024, and to confirmation statements from 5 March 2024.
3. New statement of lawful purposes
Under the new act, companies will have a duty to confirm that their intended future activities will be lawful. This new rule will apply to new and existing companies.
On the application to register a company, the subscribers (founding members) will need to confirm that they are forming the company for lawful purposes.
Existing companies will be required to confirm lawful purposes when they file their annual confirmation statement.
Who will this affect?
The requirement to confirm lawful purposes will affect all new and existing UK companies, LLPs, LPs, and SLPs.
When will this change happen?
This new rule will apply to company incorporations from 4 March 2024, and to all confirmation statements with a statement date from 5 March 2024 onwards.
4. Introduction of software-only filing of annual accounts
To improve and streamline the filing of annual accounts, Companies House will gradually move toward software-only accounts filing. All other filing options for accounts will be phased out, including:
- WebFiling
- Find and Update Company Information service
- Joint filing service with HMRC (Company Accounts and Tax Online)
- Paper filing
More than 65% of UK companies already use software filing to submit their annual accounts, so this change will have no impact on those companies.
Companies House will provide more updates once the timeline for the incremental roll-out of the change to software-only filing has been agreed.
There is no need for companies to do anything at the present time. However, suitable accounts-filing software is available to use if you would like to make the change now.
Further changes are planned for a later date, including mandating digital filing and full tagging of financial data in iXBRL format, and placing a limit on the number of times a company can shorten its Accounting Reference Period (financial year).
Who will this affect?
The change to accounts filing will affect all limited companies, LLPs, and SLPs registered in the UK.
When will this change happen?
This change will be phased in over the next two to three years. More information on software-only filing is available from Companies House.
5. Changes to small company filing options
Under the new act, the government will also be streamlining the accounts filing options for small companies and micro-entities by:
- making the filing obligations for small and micro-entity companies clearer
- requiring small companies to include a profit and loss account and a directors’ report when they file their annual accounts with Companies House
- requiring micro-entities to submit a profit and loss account with their annual accounts
- removing the option to prepare abridged accounts
- requiring documents to be delivered together, in cases where more than one document is filed, including for the filing of accounts
These measures will improve transparency by ensuring that more key financial information, such as turnover and profit or loss, is available to view on the public register.
Who will these changes affect?
The changes to small company accounts filing will affect small companies, micro-entities, small LLPs, and small SLPs.
When will these changes happen?
These new measures will be introduced over the next two to three years. You can find out more about changes to small company accounts filing options from Companies House and the Economic Crime and Corporate Transparency Bill factsheet.
6. Audit exemption
Certain companies qualify for audit exemption, including small companies and micro-entities, dormant companies, parent companies, and subsidiaries.
As a result of the changes to UK company law, the directors of any such company claiming exemption from audit will need to include an additional statement on the balance sheet.
The statement must identify which exemption they are claiming (e.g. small company; dormant) and confirm that the company qualifies for it.
Who will this affect?
The new requirement will apply to any UK company or incorporated partnership that wishes to claim exemption and file unaudited accounts.
When will this change happen?
The change will be introduced at some point in over the next two/three years. The exact date has yet to be confirmed.
7. New identity verification requirement
To prevent fraudulent appointments, identity verification will soon be compulsory for anyone who registers, runs, owns, or controls a company or incorporated partnership in the UK.
Individuals will be able to verify their identity directly via Companies House. Alternatively, they can choose indirect verification through an Authorised Corporate Service Provider (e.g. company formation agent, accountant, legal advisor).
- For existing appointments, there will be a transition period during which individuals can verify their identity, ensuring that everyone has sufficient time to comply.
- New directors will be required to verify their identity before submitting an incorporation application to Companies House. PSCs will be expected to verify within a short time after incorporation.
- For post-incorporation appointments, directors must complete their identity verification as soon as possible—and before their appointment is notified to Companies House.
- Individual PSCs will need to verify their identity no later than 14 days after registering with Companies House. Relevant Legal Entities (RFLs) will have 28 days.
To find out more, read GOV.UK’s factsheet on identity verification and authorised corporate service providers.
Who will this affect?
The requirement to verify identity will apply to new and existing company directors, company secretaries, people with significant control (PSCs), LLP members, partners in LPs and SLPs, the directors of corporate director entities, and the majority of other individuals who file with Companies House.
When will this change happen?
Identity verification measures require new secondary legislation and guidance before being introduced. As yet, no date has been confirmed, but further information is expected over the coming months.
8. Suppression of personal information at Companies House
The changes to UK company law include measures that will help to prevent the abuse of personal information that is publicly available on the Companies House register.
It will soon be possible for individuals to ask Companies House to conceal the following personal information from historical filings on the public register:
- home addresses (in most instances) when these details are shown elsewhere on the register (for example, when the address has previously been used as a registered office)
- day of birth on any documents registered before 10 October 2015
- business occupation
- signatures
There will be no need to provide any supporting evidence. The suppression of personal information will be automatic upon application.
New measures have also been introduced to further protect the personal information of individuals who are at risk of harm. Where a person is at risk due to their details being shown on the public register, they can ask Companies House to hide this information from public view, including:
- their name or previous name(s)
- any sensitive address
- all other personal details, such as service addresses and their partial date of birth, in the most serious of cases
It is expected that applicants will be required to provide supporting evidence before Companies House will suppress their information from the public register. Details of the application process have yet to be finalised.
Who will this affect?
Any person from any company or other entity whose personal details appear on the Companies House register will be able to apply.
When will these changes happen?
These new measures will come into force in a phased approach over the next two years.
9. New rules for limited partnerships
To tackle the abuse of limited partnerships and bring the current legislation up to date, new measures have been introduced by the Economic Crime and Corporate Transparency Act to make information on limited partnerships (LPs) more transparent and accessible.
When the new rules come into force, limited partnerships will be required to:
- provide partners’ names, dates of birth, and usual residential address details
- verify the identity of the general partners
- maintain a registered office address in the UK
- provide a registered email address
- provide a standard industrial classification (SIC) code
- deliver an annual confirmation statement
These changes, where relevant, will also apply to Scottish limited partnerships (SLPs). Currently, SLPs are already required to provide a registered office address and file confirmation statements.
To find out more, read GOV.UK’s factsheet on reforms to limited partnerships.
Who will these changes affect?
These changes will apply to new and existing limited partnerships registered in England & Wales or Northern Ireland, and Scottish limited partnerships (where relevant).
When will these changes happen?
The new measures require secondary legislation before they are implemented. There will be a 6-month transitional period from the commencement of the legislation.
10. Shareholder information requirements
To improve transparency and the usefulness of information held on company owners, companies will be required to:
- record the full names of individual shareholders, or the full names of corporate shareholders and firms, in their registers
- provide Companies House with a one-off full list of shareholder names on the next confirmation statement
Companies will also have the power to ensure that their members supply them with the required information and give notice to the company if their details change.
Members will have a duty to provide the information to the company within two months of becoming a member, or within two months of the date on which their registered details changed.
Where any member fails to comply with these duties without a reasonable excuse, they will have committed an offence.
Who will these changes affect?
The rules will apply to new and existing companies and members of companies.
When will these changes happen?
These measures will come into force following the finalisation of new secondary regulations and guidance. To find out more, read GOV.UK’s factsheet on improving transparency of company ownership.
11. Information on PSCs and RLEs
Additional transparency measures will also apply to information relating to people with significant control (PSCs) and relevant legal entities (RLEs).
Companies that wish to claim an exemption from providing PSC information will have to state why they satisfy the exemption conditions. Exempt companies will be required to provide the PSC information on their confirmation statement.
Where a PSC is an RLE, companies must state the conditions satisfied that allow the relevant legal entity to be recorded as a person with significant control.
12. Restrictions on corporate directors
Currently, companies registered in the UK can appoint corporate directors, provided that they also have at least one other director who is a natural person. However, this is set to change.
New restrictions on the use of corporate directors mean that companies will only be able to appoint UK corporate entities with ‘legal personality’ as corporate directors.
All directors of a corporate director entity must be natural persons. Moreover, they will also be subject to the new identity verification requirement before the corporate director’s appointment
Who will these changes affect?
The changes to UK company law concerning corporate directors will apply to new and existing companies that wish to appoint another entity as a director.
When will these changes happen?
The date on which these new restrictions will take effect has yet to be provided. However, once the legislation comes into force, it is expected that existing companies with corporate directors will be given 12 months to comply.
13. Abolition of certain company registers
The Economic Crime and Corporate Transparency Act has abolished the requirement for companies to keep the following internal (local) company registers:
- Register of directors
- Register of directors’ usual residential addresses
- Register of company secretaries
- Register of people with significant control (PSC register)
However, companies must continue to maintain the information normally kept in these registers on the central public register at Companies House.
Companies will still have to keep other internal statutory registers, including the register of members.
Additionally, the option for private companies to keep their shareholder information on the central register at Companies House (as opposed to maintaining an internal register) will be removed.
Who will this affect?
The new rules on company registers will impact all new and existing companies.
When will this change happen?
The date on which this new measure will take effect has yet to be provided. We expect updates in due course. In the meantime, companies should continue to maintain all internal statutory registers.
Find out more about the changes to UK company law
More information on changes to UK company law is available from GOV.UK. You can also sign up to the Companies House newsletter for regular updates on the new measures and what you can do to prepare.
We’re here to help, so please leave a comment below if you have any questions. Explore the 1st Formations Blog for more business news, insights, and limited company guidance.
The post 13 changes to UK company law – from 4 March 2024 appeared first on 1st Formations Blog.
This post first appeared on 1st Formations Blog - Company Registration Inform, please read the originial post: here
