Government White Paper on corporate transparency and Companies House reform
On 28 February 2022, ahead of the introduction of legislation, the Government published a "White Paper" outlining its proposals for changes to the way in which Companies House operates, aimed at increasing transparency of UK corporate entities and developing the role and powers of Companies House.
This is in response to calls for a more robust and comprehensive framework to prevent fraud, money laundering and identity theft. An overview of the key changes proposed is set out below:
- Roles and powers of Companies House – the introduction of a new statutory role of promoting and maintaining the integrity of the register (currently, there are limited powers in respect of the accuracy of the information available at Companies House). This will include: (i) a discretionary power to query and remove material which Companies House suspects is fraudulent or may compromise the integrity of the register or the wider business environment, and (ii) expanding the rules for filing documents at Companies House so that documents are subjected to verification checks before, and potentially after, they are accepted.
- Company names – new powers to Companies House to query company names which are proposed or registered in various circumstances, such as where there is an indication of fraud or other criminal activity, and also to direct the company to change its name in the event that the register's queries are unsatisfied.
- Identity verification – changes to the rules on who is required to verify their identity will mean that all entities registered at Companies House will need to have at least one person associated with them on the register who has verified their identity. Additionally, all new and existing company directors, Persons with Significant Control, members of LLPs, general partners of limited partnerships, directors of overseas companies and directors of Relevant Legal Entities will be required to verify their identity. Companies will only be allowed to act as corporate directors if all of the directors of that company are themselves natural persons who have had their identities verified. There will be a transition period after which non-compliance with identity verification rules could lead to criminal sanctions and civil penalties.
- Data sharing – Companies House will have the power to share relevant data with law enforcement, public authorities, supervisory bodies and insolvency practitioners on a case-by-case basis. This will apply to all information held by Companies House. It will also have the ability to request data from public and private bodies and cross-reference any data received with the information it holds, for the purpose of improving the integrity of the register.
- Privacy and personal information – new specific powers that will allow Companies House to protect information from being displayed on the register in certain scenarios (such as where an individual is at risk of harm) and also a general discretion to remove or suppress personal information on the public register to allow Companies House to act swiftly if and when the need arises.
- Financial information – the Government also intends to implement enhanced validation checks on financial information provided to Companies House, such as in company accounts, but this will be limited to checking that the information delivered is complete and coherent.
The changes are intended to be integrated in a way that does not undermine the low-cost and easy-to-use framework that currently exists, as well as compliment the Companies House 2020 to 2025 strategy, under which it seeks to transform digital services, improve security and implement data validation and verification measures.