Last Updated on 17.8.23 by Christian Mancier
The Economic Crime and Corporate Transparency (ECCT) Bill proposes a new requirement for identification verification with Companies House. This reform is set to change the way Companies House operates and will require anyone setting up, running, or controlling a company to verify their identity. While the reform aims to crack down on fraudulent activities, it will also limit who can file documents online. This blog post explores the impact of the ECCT Bill on Companies House and companies.
What is the ECCT Bill?
The ECCT Bill proposes the implementation of a new identity verification process for both company directors and people of significant control. This will require individuals to produce identity documents such as a passport or driving license to the Registrar of Companies. The reform aims to prevent criminals from using companies for fraudulent activities.
Impact on Online Filings
The ECCT Bill will limit who can file documents online using the Companies House web-filing platform. Anyone who files documents on behalf of a company (whether that be a director of the company concerned or an employee who is not a director) will no longer be able to do so unless they verify their identity with Companies House.
However, legal advisors and accountants registered as Authorised Corporate Service Providers (ACSP) will be able to file on behalf of their clients, assuming they are registered with a supervisory body for anti-money laundering purposes, have completed due diligence checks, and confirmed their supervisory status with Companies House.
How will the Reform Work?
Directors and people with significant control will have two options for verifying their identity. The first option is a digital service where individuals can verify directly with Companies House. The second option is through an ACSP. Existing companies will have a set period to verify the identity of their existing directors and people of significant control. New companies will be required to verify their identity before or as part of company incorporation.
Impact on Companies
The ECCT Bill will transform the way Companies House works with companies, and it will become a “gatekeeper of information”. Criminal sanctions and civil penalties may be imposed for non-compliance, and Companies House will have the authority to reject new company requests, reject statutory filings, and annotate the register to show when someone has an “unverified status”. Having an “unverified status” (which will be publicly visible) could impact a company’s credit rating, cause issues with the company’s bank accounts and impact a company’s ability to borrow monies or receive trade credit. While the reform will improve the reliability of the register, the vast amount of paperwork involved may impact other services provided by Companies House, such as filing documents, incorporating new companies, and timeframes for such services.
The ECCT Bill will introduce significant changes to Companies House operations and company filings. While the reform will improve the reliability of the register, it will also impact online filings, and companies may face criminal sanctions or civil penalties for non-compliance. It is important for companies to prepare for the new requirements and seek advice from legal advisors or accountants registered as ACSPs.