The Economic Crime and Corporate Transparency Bill

The Economic Crime and Corporate Transparency Bill (the Bill) is making its way through the House of Lords, and it is anticipated it will receive full Royal Assent during the autumn/winter 2023. 

Why is the Bill necessary and what are the major changes?

The Bill is the second phase of significant reforms being introduced by the UK Government following on from the recently enacted Crime (Transparency and Enforcement) Act. It is aimed at tackling abuse of corporate structures and bears down further on criminals and terrorist for the purposes of fraud and money laundering. 

The primary aims of the Bill are as follows:

• Broadening the Registrar of Companies powers so that the Registrar can become a more active gatekeeper over company incorporations and custodian of more reliable data. 
• Introducing mandatory identification verification for all new and existing registered directors, persons of significant control and those delivery documents to Companies House. 
• Streamlining the delivery of financial information and improving financial information so it's more accurate and reliable to make effective business decisions. 
• Strengthening the protection of personal data provided to the Registrar of Companies with the aim to protect individuals from fraud or other harms. 
• Granting the Registrar of Companies House more effective investigative and enforcement powers to cross check data with both public and private sector bodies and the power to share information with law enforcement bodies.

It is evident that the measures contained in the Bill will have a direct impact on the day-to-day operations of UK businesses once fully fledged. 

Major Changes 

Statutory Registers 

• The Bill will revoke the option of UK companies to store statutory registers with the Registrar of Companies. 
• Full names and addresses will be required to be presented in full on the register of members, abbreviations will no longer be permitted. 

Identify Verification 

• The Bill introduces a mandatory requirement for all new and existing company directors and persons of significant control to verify themselves. It is a key principle of the Bill, geared at making it more difficult for a person to file anonymously at the Registrar of Companies.  
• It will not be permitted for another person to deliver documents to the Registrar of Companies on behalf of another person, which includes companies, unless they themselves have been verified first by the Registrar of Companies.  
• There will be two routes in respect of the verification process, either directly via the Registrar of Companies or through the use of an Authorised Corporate Service Provider. 
  

Corporate Directors

The use of corporate directors will be restricted as follows:

• all corporate directors must be registered within the United Kingdom abolishing the use of overseas corporate directors
• all directors of a corporate director will have to be natural persons who have all gone through their own identify verification as mentioned above. 

Implementation Period

Following Royal Assent, we anticipate there is likely to be a grace period before these measures fully come into effect. However, the changes discussed in this insight will have an impact on those involved in the day-to-day operations and corporate compliance of any business size. Directors and governance professionals are therefore advised to familiarise themselves with the measures that will be introduced by the Bill. 

If you have any questions in respect of this insight please do not hesitate to contact us directly by using the "email me" option of any team member found in our designated Corporate Secretarial and Governance page.