Companies House – more draft secondary legislation under ECCTA laid

Further sets of regulations and rules to be made under the Economic Crime and Corporate Transparency Act 2023 (ECCTA) have been laid, including those relating to the identity verification of directors and people with significant control of companies.

The ECCTA contains, among other things, amendments to the Companies Act 2006 to facilitate the transformation of Companies House from a passive recipient of information to an active gatekeeper. Its provisions are being brought into force in stages:

• for a summary of all of the changes to Companies House’s powers and the administration of companies, LLPs and limited partnerships to be made under the ECCTA, see our blog post from October 2023;

• for details of the March 2024 commencement of the provisions in the ECCTA turning Companies House into a quasi-regulator – significantly increasing its powers to query filings, to request further evidence, and to reject and remove material from the register – see our blog post from March 2024; and

• for information on the May 2024 changes, including regulations giving Companies House the power to impose civil fines and increasing Companies House’s fees, see our blog post from May 2024.

Identity verification

Under the ECCTA, 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 – called ‘authorised corporate service providers’ or ‘ACSPs’ in the legislation – will be able to conduct these identity checks. Alternatively, individuals will be able to verify their identities directly with Companies House. Directors, PSCs and others who do not verify their ID will commit a criminal offence or incur a civil penalty, and companies that have an unverified director will also commit an offence.

The ECCTA is light on detail as to how identify verification will operate in practice. The following draft regulations and rules which have been laid provide further details as follows:

• Registrar (Identity Verification and Authorised Corporate Service Providers) Regulations 2024 – These Regulations: (i) contain provisions relating to the verification or reverification of an individual’s identity, including giving Companies House the power to make more detailed rules on the steps to be taken and evidence required (see next bullet below); (ii) provide the framework for suspending and terminating an ACSP’s status and impose record-keeping and information-sharing obligations on ACSPs; and (iii) set out the procedure for allocation of unique identifiers for verified individuals and ACSPs. The regulations will come into force when the relevant provisions of the ECCTA come into force (see further below on timing).

• Registrar’s Rules – The draft Rules made under Regulation 5 of the above Regulations list the contact information (email address and current residential address), personal information and types of evidence an applicant must provide when applying for verification of their identity. The documentary evidence required will depend on a number of factors but includes items such as passport with a biometric chip and UK photocard driving licence. The draft rules flag that there are “additional steps” an applicant must take in order for their identity to be verified, but the draft of the rules that has been published states that these will be “added later”.

Other regulations laid

The other draft regulations that have been laid are:

• The Companies and Limited Liability Partnerships (Protection and Disclosure of Information and Consequential Amendments) Regulations 2024, which will allow applications to protect a person’s residential address from public disclosure on the register in more cases than is currently possible. They will come into force on 30 September 2024 (assuming they are made before that date); and

• The Information Sharing (Disclosure by the Registrar) Regulations 2024, which specify when Companies House can disclose information to insolvency practitioners and others engaged in insolvency proceedings. They will come into force on the day they are made.

Progress report and timing update

The Department for Business and Trade has also published a progress report on the implementation and operation of Parts 1 to 3 of the ECCTA. As well as recapping the commencement of the various provisions to date (as summarised above), the report gives more information on the timing of the implementation of the other ECCTA measures.

The progress report says that, subject to the parliamentary timetable and passage of secondary legislation, the government anticipates that:

• ACPSs will be able to register in winter 2024;

• identity verification will commence during H1 2025; and

• limited partnership reforms will be introduced during 2026.

It notes that a full implementation timetable is due to be published shortly.