LAW
Tilly Bailey & Irvine ’ s commercial litigation solicitor , Daniel Peacock .
The Economic Crime and Transparency Act 2023 :
What is changing ?
Daniel Peacock , commercial litigation solicitor in the commercial disputes team at Tilly Bailey & Irvine LLP , analyses some of the key aspects of the Economic Crime and Corporate Transparency Act 2023 .
Owning a business brings about a wealth of challenges – not least having to keep up to date with the ever-changing legal requirements . This article addresses some of the key changes business owners need to be aware of .
The Economic Crime and Corporate Transparency Act 2023 ( the Act ) received Royal Assent in October 2023 and promises to strengthen the powers afforded to law enforcement agencies , along with improving the transparency of companies registered in the UK , making it easier to prosecute corporate bodies for specific financial crimes and introducing a new offence to prevent fraud .
While the act is new in its inception , it does supplement the Economic Crime ( Transparency and Enforcement ) Act 2022 , which many will remember as it was passed through parliament at relative speed because of the Russian invasion of Ukraine in 2022 .
Fraudulent trends One trend that has become apparent in recent times is the emergence of fraudulent and misleading filings made to Companies House . Fraudsters would register companies at incorrect addresses with the purpose of applying for a line of credit connected with the “ sham ” company .
In 2022 , more than 10,000 applications were received in which residential property addresses were used as a registered office without the consent of the legal owner . Fraudsters were able to register a company with the name of “ Dinner By Heston Blumenthall ” with an extra ‘ l ’ and the Ritz Hotel was also subject to an attempt of identity theft when a company was incorporated with the name “ Ritz Restaurant Limited ” on December 19 2023 . These high-profile cases underline some of the issues the act looks to block .
Key changes – Companies House and corporate reform The act enhances the role Companies House plays , with the aim of making UK corporate entities more transparent . Transparent can be interpreted different ways , but it is assumed that one of the key driving factors behind the act is to deliver a more reliable Companies House register .
The registrar of Companies House ( the registrar ) has new powers to assist it in its objective to “ promote and maintain the integrity of the register ”, while also being able to “ bear down on those who abuse corporate structures ”. Only time will tell how often the registrar will exercise its powers , but it is certain that this is a step change from the current framework .
The registrar also has at its disposal the ability to amend or remove information it does not believe to be legitimate . More specifically , the act also allows the registrar to change the address of a company ’ s registered office and take action against those persistently failing to provide an appropriate registered office .
Key changes – Identify verification and criminal offences Another big change brought into force by the act is the mandatory identity verification for directors and for persons of significant control ( PSC ). A director or PSC that fails to identify their identity will be committing an offence ( both a criminal and / or civil penalty ).
Key changes – Registered office and registered email address Companies must now have “ an appropriate address ” and will not be able to use a PO Box as a registered office . Companies are also required to supply and maintain a registered email address .
Key Changes – Checks on company names A company name cannot be too similar to another company ’ s name or trademark , but the act provides the registrar with powers to prohibit the name of new and existing companies if it believes a name to be facilitating an offence involving dishonesty or deception .
In the instance that a company name falls short of the new rules under the act , after a 28-day period the registrar will deem a company guilty of an offence and liable of a fine up to £ 1,000 .
Contact Alison Leith and Nigel Broadbent on 01740 646000 for further information .
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