Search

How can we help?

Icon

Navigating corporate transparency: ECCTA reforms series – part 1

The Economic Crime and Corporate Transparency Act 2023 (ECCTA) received Royal Assent in October 2023 and marked a pivotal moment in corporate governance and transparency. Louise Smyth, Chief Executive and Registrar of Companies, stated “This is one of the most significant moments for Companies House in our long history”.

The ECCTA’s main objective is to prevent abuse of UK corporate structures and address economic crime. It introduces significant changes to the regulatory landscape, emphasising transparency, accountability, and prevention of economic crime. These changes do not just impact large listed companies but have civil and criminal ramifications for all directors of any company incorporated in the UK, as well as all corporate entities, such as limited liability partnerships. The first set of changes brought by the Act came into force on 4 March 2024. This is the first article in a series exploring these and future changes.

The changes

1. The Registrar of Company’s new objectives

The Registrar of Companies must seek to promote four statutory objectives to enhance the accuracy and integrity of information on the register. These objectives fundamentally transform Companies House (CH) from a passive recipient of information to a more active gatekeeper.

Objective 1: Ensure that any person required to deliver documents to the registrar does so, and that the requirements related to proper delivery are complied with.

Objective 2: Ensure that information contained in the register is accurate and complete, meaning the register contains everything it ought to contain.

Objective 3: Minimise the risk of records maintained by the register creating a false or misleading impression for the public.

Objective 4: Minimise the extent to which companies and others engage in unlawful activities or facilitate such activities by others.

CH will now base its decisions on these objectives.

Sana Nahas

Trainee Solicitor

View profile

‪+44 118 960 4611

The ECCTA’s main objective is to prevent abuse of UK corporate structures and address economic crime

2. New registered office and registered email address rules

The registered office of a company must at all times be an ‘appropriate address’. Documents addressed to the company at the address and delivered by hand or by post would be expected to come to the attention of a person acting on behalf of the company, and delivery of documents there should be capable of being recorded by obtaining an acknowledgement of delivery. PO Boxes cannot be used as registered office addresses. Companies can still use a third party agent’s address if it meets the conditions for an appropriate address.

Most significantly, CH can change the registered office of a company, either on its own motion or on an application, if it is not satisfied that the registered address is an appropriate address. CH also has similar powers to require a change of an organisation’s service address, if this is not an address at which documents may be effectively served on a person.

For the first time ever, a company must now have an ‘appropriate email address’, which will be used by the registrar for its communications. Emails sent by the registrar to this email address would be expected to come to the attention of a person acting on behalf of the company.

All companies being formed will now have to provide an appropriate email address on their formation application, and all incorporated companies will need to file such an email address with their next confirmation statement. Any change of the email address should be notified to CH.

There is no requirement for this email address to be made public, so it can remain confidential, only for CH use, which is preferred to avoid potential hacking of the email account.

3. Companies to deliver a ‘lawful purpose’ statement

All companies incorporated in the UK must confirm on their confirmation statement that their future activities will be lawful. When incorporating a new company, the shareholders will not need to include a statement in their application for registration expressing their intention to form the company for lawful purposes.

The ECCTA’s far-reaching impact on corporate governance and transparency is undeniable. The heightened transparency is something to applaud on one hand, as it aims to minimise wrongdoing and act as a safeguard against economic crimes, but on the other hand, there may be concerns about the potential administrative burdens on businesses and the need for a delicate balance between regulatory oversight and corporate autonomy. Further, more significant changes will be explored in further articles in this series. For more information, or assistance generally, please contact our Corporate team here.

 

About this article

Disclaimer
This information is for guidance purposes only and should not be regarded as a substitute for taking legal advice. Please refer to the full General Notices on our website.

Sana Nahas

Trainee Solicitor

View profile

‪+44 118 960 4611

About this article

Read, listen and watch our latest insights

art
  • 28 March 2024
  • Corporate and M&A

Legal perspectives on ESG and director duties

In today’s rapidly changing business landscape, the concept of ESG factors has emerged as a guiding framework for companies seeking to thrive in the long term.

art
  • 04 March 2024
  • Corporate and M&A

Treasury Shares – An Opportunity to be Treasured

Under section 658 of the Companies Act 2006 (‘CA 2006’), there is a general rule against companies acquiring and owning their own shares.

art
  • 07 February 2024
  • Corporate and M&A

The Importance of S3 of the Unfair Contract Terms Act 1977

All entities which enter into business-to-business contracts should be aware of the Unfair Contract Terms Act 1977 to ensure that their terms of business are legally binding

art
  • 06 February 2024
  • Corporate and M&A

Clarkslegal’s Corporate team advise the exiting shareholders of leading human microbiome company

Corporate lawyers advised the shareholders of leading human microbiome company, Invivo Healthcare, on their multi-million pound sale.

art
  • 24 January 2024
  • Corporate and M&A

Clarkslegal advises Kinectrics Inc on its acquisition of Cheshire based engineering firm

Canadian multinational, Kinectrics Inc was successfully advised by Clarkslegal’s corporate team on its purchase of Engineering Analysis Services for an undisclosed sum.

art
  • 24 January 2024
  • Corporate and M&A

Clarkslegal act for Granahan McCourt Capital on acquisition of Strategic Imperatives

Clarkslegal’s corporate team, led by Ashan Arif and Jacob Montague, has advised Granaham McCourt Capital on its multi-million-pound acquisition of Strategic Imperatives.