According to the Economic Crime and Corporate Transparency Act (ECCTA) that received Royal assent on 26 October 2023, the biggest changes to UK company law are about to begin. These changes tackle economic crimes efficiently, support economic growth, and rank the UK among the best places to start and grow businesses globally.
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Our guide today shares all the changes to company law in the UK from March 2024.
Table of contents
- What are the major changes to UK Company Law from 4 March?
- Who will these changes affect?
- What are the other expected changes to UK Company Law?
- Final thoughts!
What are the major changes to UK Company Law from 4 March?
The UK government introduced its first set of changes to company law on 4 March 2024. These major reforms are introduced to comply with the ECCTA 2023 bill, which aims to improve crime and corporate transparency and support GDP growth.
- Registered Office Addresses
Every company must have an appropriate address as their registered office address instead of a PO Box. An address is considered ‘appropriate’ if any document addressed to the company is delivered to that address by post or hand and gets attention from the individual working on behalf of the company, and that delivery can be acknowledged.
If Companies House finds that your registered address isn’t appropriate, it will change it to a default address. After that, you must provide them with a proper company address and proof of proprietary ownership within 28 days. Otherwise, the Companies House can strike your company from its register. This rule for registered offices applies to all businesses operating in the UK.
- Statement of lawful purpose
Any company registering or incorporating with Companies House needs to provide a statement that confirms it is forming the company for a lawful purpose. Each company must file an annual confirmation statement from 5 March 2024 to verify its intended future activities will be lawful.
If the Companies House finds out from the information provided by a company that it is confirming that it is not being legally operated, it can take legal action.
- Confirmation statement – the requirement for a registered email address
The UK government now mandates every company to provide a registered email address to Companies House for smooth communications. Your email address will be considered ‘appropriate’ if any email from Companies House gets attention from someone acting on your company’s behalf.
All existing companies can submit their registered email address when filing their next Confirmation Statement with the Companies House. However, new companies incorporated after 4 March must provide their registered email address when registering with the Companies House.
This email address will not be shared on the public register of companies and will only be used by Companies House for communication.
Who will these changes affect?
These changes to the UK Company Law will affect all limited companies, limited liability partnerships, limited partnerships, and Scottish limited partnerships registered in the UK. It will bring new responsibilities for new and existing directors, people with significant control of a company, members of a company, and anyone who files on behalf of a company.
Therefore, all these companies need to start preparing themselves ahead of time. While some changes have already been implemented, you need to prepare for the upcoming changes.
There will be changes in the Companies House fees to fund the cost of its new power and the measures introduced under the ECCTA bill.
What are the other expected changes to UK Company Law?
Another set of changes to the UK Company Law will be released soon.
- Ban of company registers
Companies will no longer need to keep their register of directors, company secretaries, and people with significant control (PSC register).
- Introduction of software-only filing of annual accounts
Every company must file their annual account through approved software instead of web and paper filing options.
- Changes to small company filing options
Small and micro entities will change their filing process in the next two to three years. Some of these include
- Removal of abridged accounts and paper filing options
- Requirement for filing profit and loss accounts and directors’ reports while filing their annual accounts
- Companies House holds the power to ask for all parts of filing to be delivered together for complex accounts
- Limiting the number of times companies can shorten their Annual Reporting Period
- Audit exemption
Companies claiming audit exemption must provide additional statements of their balance sheet. These statements must identify which exemption the company is claiming and confirm that they qualify.
- Identity verification changes
According to the Companies House reforms, there will be a new identity verification process to identify companies operating for illegal purposes.
Directors and PSCs of new companies, members of limited liability partnerships, and anyone acting on behalf of a company must verify their identity directly with Companies House or through an authorised agent.
- Suppression of personal information at Companies House
Any company can request the Companies House to conceal its personal information, such as date of birth, home address, business occupation, and signatures, on the public register. You don’t need to provide any evidence, and personal information will be suppressed automatically after submission of the application.
- New rules for limited partnerships
Companies House intends to bring stronger checks on company after 4 March 2024. Limited partnerships will now be required to provide more information, including partner details, verification of the identity of general partners, registered office address, standard industrial classification code, and submission of annual confirmation statements through an authorised agent.
- Increased transparency of company ownership
You need to record the full names of corporate shareholders and firms or individual shareholders in Companies House registers. Additionally, you must provide them with a list of shareholder names on your next confirmation statement.
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Final thoughts!
While registering an ‘appropriate’ office address, ‘appropriate’ email address, and filing a statement of lawful purpose are the three popular measures the government initially took, there are many more to come.
You can consult an accountant about these changes and how they will affect your company in the coming years. They can help you cope with the new changes and ensure your company complies with the UK regulatory requirements.