Legal Trend Analysis: New Changes to UK Company Law 2024
On 4th March 2024 the first set of changes under the Economic Crime and Corporate Transparency Act (which received royal assent in October 2023) came into force.
What do you need to know and what are the consequences of non-compliance?
Change 1: Appropriate Address
As part of new legislation aimed at improving the accuracy and quality of company data, Companies House now requires that all companies have an “appropriate address” as their registered office.
An appropriate address is defined as one where:
- any documents sent to the registered office should be expected to come to the attention of a person acting on behalf of the company,
- any documents sent to that address can be recorded by an acknowledgement of delivery.
These changes mean companies will no longer be able to use a PO Box as a registered office address, although they can still use a third-party agent’s address provided it still meets the conditions listed above.
Companies without an “appropriate address” could now be struck off the register. Once an inaccuracy has been identified companies have 28 days to provide an “appropriate address” with evidence of proprietary ownership.
Change 2: Registered email address
In addition to an “appropriate address”, all companies are now also required to provide Companies House with a registered email address, which can be used to correspond with directors and/or others acting on behalf of the company.
For new companies, this email address will need to be provided on incorporation, whilst existing companies must comply with this requirement when filing their next conformation statement.
In the same way as the “appropriate address” requirement, companies that fail to provide and maintain a registered email address will be viewed as committing an offence.
Change 3: Statement of lawful purpose
On incorporation new businesses must now confirm that they are forming the company for a lawful purpose, and additionally acknowledge that the intended future activities of the company are lawful. Again, existing companies will also be required to comply when filing their next confirmation statement.
The intention is to make it clear that all companies on the register have a duty to operate in a lawful way. Companies House may take action against a company if it receives information that confirms it is not operating lawfully.
Change 4: Increased power to scrutinise
To fulfil its role as the gatekeeper of company information, Companies House has been given increased powers to scrutinise and reject inconsistent, inaccurate, and misleading information filed by companies. In addition, it now has authority to conduct checks on company names that give false/misleading information and prohibit company names that could potentially be used fraudulently or for the purposes of other forms of criminal activity.
It’s therefore vital that companies ensure information is filed properly and that it does not contain inaccuracies or omissions. On identifying inconsistent, inaccurate, or misleading information, Companies House will issue a formal request for further information. If a company fails to respond to the request within 14 days, it will be considered a criminal offence. The potential penalties include prosecution, fines, or an annotation on the register to stop it misleading the public.
What next?
The next tranche of changes in the phased implementation of the Economic Crime and Corporate Transparency Act include:
- Identity verification requirements for any individual setting up, owning, running or controlling a company in the UK
- Protection of personal information, whereby individuals will be able to apply to suppress personal information and/or apply to have personal information protected from public view because of risk of harm.
- Changes to limited partnerships, requiring the filing of information via authorised agents.
- Improving the transparency of company ownership by requiring companies to provide additional shareholder information, and restrictions on the use of corporate directors.
- Even more investigation and enforcement powers for Companies House
- New powers for Companies House to share data with law enforcement agencies and other government departments.
Further information on the current and future changes can be found by visiting Changes to UK company law – Changes to UK company law.
What does your company need to do now?
It is vital that your company immediately:
- Identifies any potential inaccuracies or omissions in the data you currently have provided to Companies House
- Ensures it has filed an “appropriate address” registered, especially if currently using a PO Box or third-party address
- Provides a registered email address and ensures that it will be maintained by the correct people.
If you would like more information about these changes and how they might affect your business, or advice on rapidly-changing company legislation, contact a member of Leverets’ expert team today.
