Enhancing the Companies House Registry: A New Approach?
In a significant move to combat fraud and improve the accuracy of data on the UK’s company register, Companies House has been granted new powers and resources, marking the most significant change in its 180-year history.
The Economic Crime and Corporate Transparency Act 2023, enacted on 4 March 2023, outlines these new powers, which include enhanced information gathering capabilities and the ability to reject documents before they are filed on the register. The Act, specifically sections 83, 79, 28, 29, and sections 8-10, provides Companies House with the authority to require additional documentation from companies when requested.
One of the key changes is the increased scrutiny of company names. New prohibitions have been put in place, preventing names connected to a criminal purpose, suggesting a connection to foreign governments, or containing computer codes. Companies will no longer be allowed to use PO boxes as their registered address.
Moreover, companies will be required to provide an email address when registering and affirm that they are formed for a lawful purpose. This affirmation is a crucial step towards ensuring that only legitimate businesses are registered.
Companies House has recruited more than 160 extra staff to handle these new duties, with plans to hire around 60 more. The increased staff will enable Companies House to conduct more robust checks on company names, verify identities of directors and Persons with Significant Control (PSCs), and remove suspicious or fraudulent entries more proactively.
These new measures are expected to be highly effective in combating fraud and improving the accuracy of data on the UK’s company register. Since their introduction starting March 2024 and through to 2025, Companies House has seen significant results, including the prevention of over 14,000 suspicious filings and the rejection of more than 3,500 incorporation documents that raised fraud concerns.
However, while these changes represent a significant step forward, challenges remain. Legacy data issues, unverifiable PSCs, and potential data lags may still be exploited by sophisticated criminals. Therefore, experts recommend combining Companies House data with other data sources for thorough due diligence and maintaining vigilance over evolving company law and fraud prevention expectations.
In addition, Companies House has increased its fees for companies, with these fees being reinvested to cover the costs of its services. The new fees will come into effect in May 2024.
The new powers given to Companies House are met with enthusiasm by its CEO, Louise Smyth, who stated that these are the most significant changes for Companies House in its 180-year history. The reforms are expected to yield tangible fraud prevention outcomes, with further benefits expected as implementation matures.
In summary, the combination of increased resources, new statutory powers, proactive data management, and reinforced legal duties for companies constitutes a major improvement in the fight against company fraud and ensures greater accuracy and trustworthiness of the UK company register.
1) In line with the Economic Crime and Corporate Transparency Act 2023, Companies House is expected to implement new fees to cover the costs of its services, with these changes taking effect in May 2024.
2) The enhanced information gathering capabilities and new powers granted to Companies House as per the Act are set to improve the accuracy of data on the UK’s company register, targeting business registrations and financial transactions with increased scrutiny.
