Company Law Update 2024

There is an exciting development in the world of Company law which is proposed to be introduced in 2024. In this article, Kyrran Dearnley-Porter and Jake Bedford discuss the upcoming Companies House reforms. As of 4th March 2024, a new set of measures will be introduced under the Economic Crime and Corporate Transparency Act. This act received royal assent on 26 October 2023 and gives Companies House the power to assist further in tackling economic crime by improving transparency and having accurate information on registers. This will address some of the changes that the act will impose and its practical effect which will affect the day-to-day running of companies.  

This is the largest change to Companies House since corporate registrations were established in 1844, and it is therefore important that your business understands what is required moving forward. The purpose of this new piece of legislation is to make it easier to prosecute companies for economic activities. The initial changes include:  

What are the changes?

This is the largest change to Companies House since corporate registrations were established in 1844, and it is therefore important that your business understands what is required moving forward. The purpose of this new piece of legislation is to make it easier to prosecute companies for economic activities. The initial changes include:  

• Registered office addresses – the changes here mean that companies may no longer be able to use a PO Box as their registered address.  
• Registered email address – a new requirement that means all companies must provide a registered email address, which Companies House will use to communicate with. It is therefore important that companies provide an appropriate email address which is secure and accessible. Existing companies are required to provide an email address when they file the next confirmation statement with a date from 5th March (and will receive a prompt to do so at this point). The same email address can be used for multiple companies and will not be made publicly available. 
• Statement of lawful purpose – when incorporating new companies, the subscribing members need to confirm that the company is being formed for a lawful purpose. Likewise, existing companies need to make a lawful purpose statement when they file the next confirmation statement with a date from 5th March. It appears companies that do not make such a statement will be prevented from any further filings until such a statement is supplied. It is expected that these statements will then be required with every subsequent confirmation statement. 
• Powers – Companies House will be granted greater powers to query information and conduct stronger checks on company names. 

What are the longer-term changes?

In the short term, the upcoming changes should not impose too much of a burden on companies, however, there are changes in the pipeline that will require companies to take positive action. The longer-term changes are: 

Accounts – the transition to filing accounts by software only. 

• Identity verification – anybody owning, controlling, running or setting up a company in the UK will need to verify their identity. 
• Companies House fees – as with everything else in the world, Companies House are increasing certain fees as well as making sure costs are recovered from existing expenditures. 
• Information protection – individuals will be able to suppress personal information from historical documents and may apply to have personal information protected from public view (if there is a risk of harm posed by their access by the public). 
• Transparency – new requirements for shareholders to provide additional information, and restrictions on the use of corporate directors. 

When will these changes be implemented?

There is no precise indication as to when these changes will be implemented, other than that they are intended to be made in 2024. 

Another implication of the reform is that should a senior manager commit an economic crime in the discharge of their duties, then the organisation will also be held accountable under a new criminal offence of ‘failure to prevent fraud’. The aim of this is to enhance preventative measures in organisations to reduce any risk which places a larger burden on them. This only applies to ‘Large Companies’ which is defined in the Companies Act 2006 as meeting two of the following:  

1. More than 250 employees;  
2. More than £6 million turnover; and  
3. More than £18 million in total assets.  

Many of the suggested reforms require secondary legislation to be enacted so the date of 4th March 2024 is still tentative as it is dependent on parliamentary timetables.  

As always, the consequences for companies not complying with the obligations imposed by Companies House are: 

• Fines; 
• An ‘annotation’ on the company’s record; and/or 
• Criminal prosecution 

What should I do next?

Companies need to understand the changes that are coming as the consequences of breaching these are significant. At Chadwick Lawrence, we would be glad to assist in ensuring that your company is compliant with the new regulations. If you would like assistance with this, please contact newenquires-coco@chadlaw.co.uk for assistance. 

If you’d like to read about the upcoming changes in more detail, you can do so here: https://changestoukcompanylaw.campaign.gov.uk/changes-at-a-glance/.