The Economic Crime and Corporate Transparency Act 2023 (the ECCTA) marked the start of a new era for businesses registered at the UK’s Companies House, with the first wave of changes coming into effect in March 2024. Companies must familiarise themselves with these reforms, designed to bolster transparency, increase accountability, and help combat financial crimes. As commercial legal advisers, our clients include many businesses and owner-managed enterprises in London and overseas. In this article, we will explore the ECCTA changes in detail and offer a comprehensive roadmap for companies like those we represent who wish to navigate a path towards ECCTA compliance in a proportionate and cost-effective manner.
Registered Office Addresses – A Shift Towards Accountability
From the beginning of March 2024, companies are required to have an ‘appropriate address’ for their registered office. This means that the registered office must be an address where documents can reliably reach a designated representative of the company. The practice of using PO Boxes as registered office addresses will no longer be allowed.
What Companies Should Do To Get An ECCTA Appropriate Address
If you don’t have an appropriate address within the meaning of ECCTA your company could be struck off the register, prompting a default address change by Companies House. We would suggest that:
- Companies currently using a PO Box must change their registered office address to avoid potential penalties
- Consider using a third-party agent’s address, ensuring it meets the conditions for an appropriate address
Registered Email Addresses: Enhancing Communication and Compliance
Under ECCTA all companies must provide a registered email address to Companies House. This address will be kept confidential but will be used by Companies House for communication. Companies incorporating after March 2024 must provide this email while existing companies must do so when submitting their next confirmation statement.
What Companies Should Do:
– Prepare to provide a registered email address for effective communication with Companies House.
– Ensure the email address is appropriate and regularly monitored.
– Understand that maintaining an accurate registered email address is a legal obligation, and non-compliance constitutes an offence.
Statement of Lawful Purpose – Emphasising Legal Compliance
The ECCTA regime mandates those intending to incorporate a company as shareholders to ensure that the company is established with a lawful purpose. Additionally, all companies must validate the legality of their proposed future endeavours when submitting their confirmation statement.
What Companies Should Do To Demonstrate Lawful Purpose:
– Incorporators should be ready to confirm the lawful purpose of the company during the incorporation process
– From 5 March 2024 Existing companies must make lawful purpose statements when filing their confirmation statement
– Understand that these statements of lawful purpose underline the duty of all companies, new and existing, to operate lawfully.
Enhanced Powers for Companies House – Strengthening Oversight
The ECCTA gives Companies House greater scope to verify information and ask for additional proof, carry out more thorough investigations on company names, make notes in the register in the event of potentially misleading details, and improve the accuracy of the register by cross-checking data.
What Companies Should Do:
– Be prepared for potential queries from Companies House regarding information accuracy
– Ensure company names comply with the new, more stringent checks
– Cooperate with Companies House to rectify any confusing or misleading information
Compliance and the Big Picture: Meeting New Registrar Objectives
The ECCTA underscores the objectives of the Companies House Registrar. It places a strong emphasis on accuracy, transparency, and accountability in respect of the Companies House register. Companies are strongly urged to adhere to these objectives to avoid facing penalties and legal repercussions.
What Companies Should Do To Comply With ECCTA:
– Stay informed about the changes and regularly check for updates from Companies House
– Implement internal processes to ensure ongoing compliance with the new requirements
– Consider seeking professional advice to navigate the intricacies of these regulatory changes
Comment
Companies must be proactive about adjusting to the ever-changing regulatory landscape. Very much like the Register of Persons With Significant Control, the ECCTA changes are aimed at promoting a business environment that prioritises transparency, accountability, and adherence to laws. By understanding the impact of these changes and taking proactive measures to adhere to them, companies can seamlessly navigate the transition towards ECCTA compliance and play an active role in creating a more resilient and credible business environment. Staying knowledgeable about the changes, actively engaging with the new requirements, and embracing opportunities for growth and progress within this revamped regulatory framework is crucial for businesses, as non-compliance could lead to severe penalties and legal ramifications.
Contact us
At Nath Solicitors, we specialise in providing expert legal guidance and support to businesses. our team is well-equipped to assist companies in understanding and complying with the ECCTA.
If you find yourself needing assistance or have questions about how ECCTA may impact your business, do not hesitate to contact us on 0203 983 8278 or get in touch with the firm online. Our experienced legal professionals are committed to offering tailored solutions and ensuring that your company remains compliant while thriving in a dynamic regulatory environment.
