On 5 May 2019 BEIS (the Department for Business, Energy & Industrial Strategy) published a consultation on options to enhance the role of Companies House and increase the transparency of UK corporate entities.
On 5 May 2019 BEIS (the Department for Business, Energy & Industrial Strategy) published a consultation on options to enhance the role of Companies House and increase the transparency of UK corporate entities – which has been billed as the “the biggest changes to the UK system for setting up and operating companies since the UK company register was created in 1844”. So, do the proposed reforms live up to this headline?
It is clear that the proposals seek to improve the accuracy of information on the register at Companies House and to strengthen to UK’s ability to combat economic crime – whilst remaining a global leader in the corporate arena. The government is consulting on a wide range of possible measures – many of which would take years to implement as they require significant legislative changes, as well as wholesale systems, process and staffing changes at Companies House.
The key change would result in a shift in the status of Companies House from a largely passive filing system to more of a proactive verification body - sharing information with other enforcement agencies to make it easier to spot criminal activities and cross-checking its information against data held by other bodies.
It is proposed that individual directors and people with significant control (PSCs), as well as those who present information for filing at Companies House, will have to verify their identifies before being added to the register and on an ongoing basis. The key here will be to ensure the verification process is timely and efficient. The consultation also looks at whether this verification requirement should be partially extended to shareholders – with the register noting when shareholders have not had their identities verified. This could prove a big task for private companies with hundreds of shareholders as a result of numerous venture capital fundraisings for example.
However, the proposals in the consultation are wide ranging – for example; the government is considering whether a cap on the number of directorships an individual can hold concurrently should be introduced. Other aspects considered in the consultation include:
It is also stated that Companies House charges are likely to increase if the proposals are adopted – although it is noted that they will remain low by international standards.
Comments on the consultation are invited by 5 August 2019 – and we will keep a watching brief over developments.
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