The aim is to increase company transparency and clamp down on fraud and money laundering, which costs the UK economy more than £100 billion a year, according to the National Crime Agency.
Compulsory identity verification will be introduced for all directors, people with significant control (PSCs) of companies and agents who file on behalf of companies. General partners in limited partnerships and designated members in limited liability partnerships will also have to comply. A new director’s appointment will only have legal effect once their identity has been confirmed.
Verification will be compulsory for all PSCs and any non-verification status will appear on the public register. Failure to verify will be an offence. The government will consider how these principles can apply to companies controlled by legal entities rather than individuals.
However, shareholders will not need to have their identity verified unless they are PSCs.
Transitional period
The new requirements will apply to all live registered companies, with a transitional period after which unverified individuals will face compliance action and possible prosecution. Companies House aims to finalise an identity verification system and start user testing later this year.
Companies House will be given powers to check and query submitted information before it is placed on the register, and it will have wider powers to investigate and remove false information. Changes to the filing of company accounts are expected to include digital iXBRL tagging that would allow software to analyse, collate and cross-reference data across different sets of accounts.
Some of the reforms are intended to help protect individuals from fraud and other harm. The register will no longer have to show directors’ occupation, signature, day of date of birth and residential address if it is the company’s registered office.
Other changes will focus on ensuring compliance, sharing intelligence and deterring abuse of corporate entities. Companies House data will be shared with data held by other bodies and non-compliant limited partnerships could be struck off the register. Companies House will be able to query and possibly reject company names before registration and the procedure for issuing certificates of good standing will be reformed to prevent their fraudulent use.
The government will publish details of how the reforms – aimed at promoting business confidence – will be implemented but legislation will only be introduced when Parliamentary time allows.