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Navigating corporate transparency: ECCTA reforms series

This is the second article in a series exploring the changes brought by the Economic Crime and Corporate Transparency Act 2023 (ECCTA). For a background of the ECCTA and the changes we reported on previously, check out our part 1 article here.

The changes

Stronger checks and new powers on company names

In the UK we have always had certain controls on company names, such as that names cannot be the same or too similar to an existing company name, and terms implying a connection with the UK government were not allowed. Recent expansions under the ECCTA have widened the scope of prohibited company names to include those suggesting a connection with:

  • foreign government
  • agency or authority of foreign government
  • an international organisation whose members include two or more countries or territories or their governments

The increased restrictions on company and business names introduced by the ECCTA came into force on 4 March 2024. Previously, the Registrar had limited powers to do anything once a name passes the thresholds set. However, the Secretary of State now has powers to refuse to register a proposed company name, or direct a company to change its existing name. If a company fails to do so within a defined period, the Register will be able to remove the company’s name from the Registrar and simply replace it with its company number! People who fail to respond to a direction to change company name within 28 days will be guilty of an offence as well as be liable to pay a fine of up to £1,000.

The purpose of these new powers is to improve the integrity of the register and increase trust in UK companies.

The Secretary of State’s power is exercisable if it appears that a company name:

  • has been used (or is intended to be used) by the company to:
    • facilitate commission of an offence involving dishonesty or deception; or
    • carry out conduct that, if carried out in the UK would amount to such an offence; or
  • may give a misleading impression of the company’s activities, so as to pose a risk of harm to the public in the UK or elsewhere. This is wider than the previous ‘likely to cause harm to the public’ threshold.

The Secretary of State also has new powers to stop the avoidance of a direction to change name.

The Registrar may refuse to register or determine a new name for a company whose existing name, in the Registrar’s opinion, consists of or includes computer code.

These changes underscore the necessity of thorough due diligence when selecting a company name to prevent delays. Companies must ensure their names do not imply unwarranted affiliations which could lead to legal complications and rebranding costs.

The purpose of these new powers is to improve the integrity of the register and increase trust in UK companies.

CH power to query information

The Registrar now has the power to reject and query new filings, and to query information already on the register, where the information is potentially fraudulent, suspicious, or may otherwise impact on the integrity of the register. This is aimed at catching anything which undermines the quality of information on the register, or which enables individuals to pursue illicit activity, such as fraud and other economic crime.

The ECCTA also introduces a power for the Registrar to compel the production of information to satisfy a query it has about information delivered to her, so that she can verify the authenticity of the information provided. The recipient entity will be given a time limit in which to respond, and should provide any information requested. There is a discretion to grant an extension to this time limit where the Registrar is satisfied that this is appropriate.

If an entity fails to respond to a query from the Registrar, or fails to provide sufficient evidence in its response, the Registrar will be able to take a number of actions, including imposing sanctions.

This reinforces the importance of transparency and accuracy in corporate filings, as companies should provide accurate information and anticipate possible queries from the Registrar.

Annotation of register re potential issues

Also from 4 March 2024, the Registrar, as an active gatekeeper of company information, has a new power to annotate and remove material from the register, and searchers will be able to see where there are potential issues with some filed information. The Registrar can use data matching to identify and remove inaccurate information.

Are your filings up to date and do your internal records match what is filed at Companies House? The ECCTA reforms serve as a reminder to organisations that the Registrar is keen on making the register as accurate as possible. If you have any questions about any information in this article, contact our corporate lawyers here.

About this article

Sana Nahas

Trainee Solicitor

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‪+44 118 960 4611

About this article

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