On 26 October 2023, the groundwork was laid for the most momentous change in corporate governance in the UK since the Companies Act (2006). It went by the comparatively benign sounding name of the Economic Crime and Corporate Transparency Act (2023). While the principles of the Act are very much welcome (perhaps even overdue) in trying to enhance transparency of reporting for corporates, it creates more onerous requirements for Directors and Persons of Significant Control (including Relevant Legal Entities).

The changes will come in to place over several years, with the first tranche coming into force on 4 March 2024, and the final trance expected mid-2026. Summarised below is our understanding of the requirements at the time of writing. We will provide further information as it becomes available, but the most up to date published information can be found on the government microsite here.

One of the more significant changes that as a result of this increased diligence, Companies House are increasing their fees across the board, to roughly 3-4 times the current level. This increase comes in on 1 May 2024, and means that for some things our fees will have to increase. Current clients will receive notice of these changes in the coming weeks, but the biggest jump is for Company Formations.

If you are thinking about forming a Limited Company, please contact us as soon as possible to discuss your needs, and take advantage of the current fee level (£50 versus a cost of £100 for incorporations after 1 May).

Changes coming into force 4 March 2024

• Registered office addresses must now be “appropriate addresses”. This means an address at which post received can be accepted by an officer of the company, including signed for post. Registered office services continue to be acceptable for this purpose, but PO Box addresses can no longer be used.
• There will be a new requirement to provide an email address (which will not be placed on the public record). We have confirmed that the email address for a corporate company secretary is acceptable for this purpose, and will be offering this to all those clients with our company secretarial service.
• For both the registered office and registered email address, there is an enhanced responsibility on the company to ensure these are kept up to date.
• Subscribers (shareholders) will now have to confirm a company is being formed for a lawful purpose, and the ongoing lawful purpose will form part of the annual confirmation statement.

ID Verification process coming into force winter 2024 – spring 2025

• This is the most robust change to governance reporting, which is being implemented to confirm each individual (or in the case of a corporate body, the officers and PSCs of the corporate body) are “real people”.
• This will be implemented by means of either facial recognition technology, or a verified and certified passport copy.
• This will apply to the officers and PSCs of both new and existing companies, and for existing companies will be required when completing the first confirmation statement after the requirement is enacted, but will (in most cases) be a one off requirement.
• This can be done via Companies House Directly, but in most cases (and certainly for those with our company secretarial service) will be completed by what will be termed “Authorised Corporate Services Providers”, which will largely be accountants and company formation agents.
• More information on this process will be available once the secondary legislation needed to enact it has been passed.

Changes to Accounts Filing Requirements likely to come into force early-mid 2026

• Driven principally by a move to software only filing.
• This means companies of all sizes will have to use software to file.
• Companies filing under FRS102 (Small-Medium entities) or FRS105 (Micro entities) will ALL be required to file a profit & loss statement for the public record. The level of detail required is unclear at this point.
• Those filing under FRS102 (Small-Medium entities) will now be obliged to include a directors’ report.
• “Abridged” accounts (formerly known as “Filleted” accounts) will no longer be accepted.
• Audit exemptions, while remaining in force, will now be accompanied with a requirement for the grounds on which the company is exempt to be specifically stated in the balance sheet notes. This has been best practice for some time, and only really constitutes a minor change of wording.

Other changes for which the implementation date is currently unclear

Corporate directors (ie a company acting as a director of another company) will no longer be permitted. We have confirmed that this DOES NOT apply to other company officers, so corporate company secretaries will still be allowed, as this is how many companies appoint an expert organisation to act on their behalf.