The Economic Crime and Corporate Transparency Act 2023 – Limited Companies and LLPs

The Economic Crime and Corporate Transparency Act (the "Act") has received Royal Assent and the first elements to impact companies and LLPs were enacted on 29 February 2024, being published and then into force on Monday 4 March 2024.

What are the aims of the Act?

Following on from the Government’s initiatives under the Economic Crime (Transparency and Enforcement) Act 2022, the new Act aims to tackle economic crime and improve the transparency of corporate entities in the UK.

What is changing for limited companies from 4 March?

• Companies House reform: Companies House have new investigative powers to verify, amend and/or remove information that has been filed on the register. Companies House has also been given the power to require documents to be delivered by electronic means only. It is anticipated that all documents that require to be filed with Companies House will be filed electronically. We have systems in place to assist clients with electronic filings and will continue to do so as part of our role as an Authorised Corporate Service Provider (“ASCP”) (when that requirement comes into force).
  
  
• Registered office address: Companies must ensure that their registered office is an appropriate address. We will continue to provide registered office services to clients to help meet this new requirement.
  
  
• Registered email address: every company will be required to maintain an appropriate email address. We expect this to be used principally for communications from Companies House and HMRC. We have systems in place and will provide a registered email service as part of our registered office service.
  
  
• Confirmation statement: Confirmation statements will need to include a statement that the future intended activities of the company are lawful. We currently assist clients with making annual confirmation statement filings and will capture this disclosure in our service.
  
  
• Incorporation: On incorporation of a company, a statement will be required confirming that neither the directors nor any Persons with Significant Control (“PSC”) are disqualified under directors’ disqualification legislation, as well as confirming that the company is being formed for a lawful purpose. This requirement is included in our incorporation service that we currently provide to clients.
  
  

What will follow at a later date?

• ACSPs: the Act introduces the new Authorised Corporate Service Provider role.  Companies House filings are often made by intermediary corporate service providers (including law firms). When the applicable provisions come into force, only corporate service providers authorised by the UK Registrar of Companies will be able to deliver documents to Companies House and complete newly introduced identity verification requirements. We intend to become an ACSP as soon as it is possible to do so and continue to help clients make filings and meet the new requirements under the Act as and when they come into force.
  
  
• Identity verification: there will be an obligation to carry out identity verification in certain circumstances. This will apply to all new and existing company directors, PSCs and anyone submitting filings on behalf of a company, and for members and PSCs of an LLP. Burness Paull will be ready to assist with these processes, ensuring compliance as and when these requirements come into force.
  
  
• Corporate directors: the use of corporate directors will be restricted.
  
  
• Shareholders: more details regarding shareholders and their shareholdings will be required in the register of members and will be included in the first confirmation statement filed following implementation of the Act (see below).
  
  
• Statutory registers: only a register of members will be required to be maintained by companies. All other information will be held centrally by Companies House. We currently manage registers for clients and we will continue to maintain them as part of our company secretarial service.
  
  
• Company accounts: Micro-entities will be required to file a balance sheet and a profit and loss account only, and small companies will be required to file a balance sheet, a profit and loss account and a director’s report. We currently assist clients with the filing of their accounts and will extend our service to ensure compliance with this new requirement.
  
  
• Incorporations: any new company will be required to confirm that the identity of the directors has been verified alongside requirements introduced on 4 March.
  
  

What about LLPs?

It is anticipated that the changes discussed above for companies will, in so far as possible, be applied to LLPs in secondary legislation. Some of this secondary legislation has now been passed (on 1 March 2024) and became effective on 4 March 2024 - those provisions now required to be met by companies, as set out above, are also required to be met by LLPs, with the exception of the lawful purpose statement on the incorporation of any new LLP.

When will these further requirements under the Act come into force?

Not imminently is the short answer.

The Act contemplates a lot of detail and process being clarified and explained in subsequent secondary legislation and guidance which we expect in the coming weeks and months.

Companies House will be preparing systems and processes to accept and process additional filings and identity verification checks. From a practical point of view, most provisions of the Act can only come into force once those systems and processes are finalised and in place.

We will keep you updated with further implementation timeframes as and when these become available.

Further legislation

In due course, further legislation will be introduced to detail how these changes will take effect. We will keep this page updated with new information. You can also sign up for updates to stay informed and ahead of the curve on the Act’s

Please get in touch with your usual contact within the Burness Paull corporate team to find out how we can help you navigate the Act.
 

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