The Government has published a White Paper on the reform of Companies House. Under the reforms, Companies House will be given greater powers in relation to information on the register, identity-verification requirements will be introduced for all new and existing company directors, and the ban on corporate directors will be implemented.
The response follows an initial consultation in 2019, and three follow-up consultations in 2020 (see our previous blog post here).
Enhanced role and greater powers for Companies House
The reforms will result in the biggest change in the role of the Registrar since it was created in 1884, turning it from a largely passive recipient of information to a much more active gatekeeper. Under the plans, Companies House will:
- Power to query information – be given the power to query any filings (including company names) that appear erroneous, anomalous or suspicious, and which may impact the integrity of the register or the wider business environment. It will have power to request further evidence and/or reject the filing;
- Power to remove information from the register – have power to remove material from the register more swiftly and in wider circumstances than is currently the case; and
- Digital filing of information – be able to require all information to be filed digitally. Company accounts will have to be tagged and filed in iXBRL.
New identity verification requirements will be introduced for all new and existing company directors (and equivalents for other entities), people with significant control (PSCs) and those filing information with Companies House. UK company formation agents that register with Companies House can conduct the checks.
Directors and PSCs who do not verify their ID will commit a criminal offence and/or incur a civil penalty. Companies that have an unverified director will also commit an offence.
Ban on corporate directors
The ban on corporate directors (contained in the Small Business, Enterprise and Employment Act 2015) will also be implemented. The only exception is where:
- all the directors of the corporate director are natural persons; and
- prior to their appointment as directors of the corporate director, all the directors have had their identities verified.
Only UK registered corporate directors will be permitted – companies will not be able to have overseas-registered corporate directors.
An easy reference snapshot of the proposals can be found here.