Syed Rahman of Rahman Ravelli details the recently-announced consequences for misusing the national register.
Companies House has now introduced new penalties for businesses that misuse the national register.
The holder of the UK's register of companies and the Register of Overseas Entities has said that companies that do not stay on top of their filing obligations could face financial penalties. Civil action, disqualification of directors and even criminal prosecution are the possible consequences of such failings.
The announcement is the latest stage in the implementation of the Economic Crime and Corporate Transparency Act 2023 (ECCTA), which became law in October and contains measures to tackle the flow of dirty money and further empower prosecutors.
Companies House has said a consistent and proportionate approach will be taken, with these new powers used “firmly, but fairly, enforce the law."
ECCTA sees Companies House as the custodian of information about the country’s businesses. Its measures are aimed at ensuring such information is as accurate as possible and at increasing company transparency in order to weed out fraudulent organisations and those used as fronts for criminals.
Prior to ECCTA coming into force, Companies House was obliged to accept information that was properly delivered, which meant it met all the requirements of the Companies Act 2006 and the Registrar's rules. Its powers to question the accuracy of such information was limited. Now, however, it can order a company to provide more information - and can reject if it believes it is suspicious or potentially fraudulent.
Companies House has said it will work with the Insolvency Service to investigate and prosecute offences. It believes this approach will improve the quality of data on its registers and assist it in the identification and prevention of economic crime.
Other ECCTA measures, including those relating to reform of accounts and identity verification, will be introduced over a longer period.
New powers available to Companies House allow it to take action against companies that persistently refuse to provide an appropriate address, remove inaccurate material or disclose data to law enforcement agencies.
It has started to remove names and addresses that have been submitted to it without those individuals’ consent. To do this used to require those individuals making an application to the courts. Registered office addresses and other documents affecting a total of 64,300 companies were removed between March and September.
Any company that submits a registered office address that is inappropriate - because, for example, it is being used fraudulently – will see their address changed to a default address. That company will then be struck off the register unless it can provide an appropriate address and evidence that it is entitled to use it. Companies House has said this process is currently leading to a strike-off rate of 3,000 companies a fortnight.
