Changes ahead for Companies House and Company Officers?
The UK government ran a consultation from May to August 2019 on Corporate and Transparency Register Reform. It was noted that the operations of Companies House had remained largely the same for many years and unfortunately, recently there have been increasing instances of misuse and concerns about accuracy. The Consultation sought views on a number of issues to try to enhance the role of Companies House and increase the transparency of companies.
The Government has recently issued their response to the Consultation and there are a number of issues raised which may influence future changes at Companies House and for Company Officers. I note below a few of those.
The introduction of identity verification
It is intended that identity verification be introduced into the incorporation and filing processes at Companies House. It was noted that the incorporation by Companies House is one of the fastest in the world and the intention is to develop a fast and efficient 24/7 digital verification system to ensure this additional step does not cause any delays to that or when making filings.
Before a director can be appointed to a company, their identity will need to be verified, as will any individual who undertakes filings on behalf of a company (directors, secretary, employees or an agent), persons of significant control and members of limited liability partnerships. There is however no intention to extend identity verification to shareholders; privacy concerns for investors and family members (amongst other reasons) has ruled this out.
With regard to persons of significant control, due to the nature of their appointment, it will not be possible to introduce identity verification prior to appointment. Instead they should be responsible for verifying their own identity and it will be flagged on the public register if they have not been verified.
The intention is for all persons who require to have their identity verified to have one verified account with Companies House. Once verified, no further verification will be needed and further appointments and filings can be made through the online verified account. Many who already make filings on behalf of companies will recognise this. As to whether there will be changes to this or the same system will be rolled out for others is unknown at present.
There will of course be a transitional period in relation to current directors etc. but it is thought necessary to extend the identity verification process to include these individuals to maintain consistency and increase the accuracy and reliability of the data held.
Access to shareholder information
The Consultation and responses recognised that there is a need to make it easier to access information on company shareholders. The format is to be improved so that a full list of shareholders can be viewed easily and such list would be updated annually at the same time as filing the Confirmation Statement. The current position is quite unsatisfactory in that the user has to view numerous filings to obtain a full picture of the current and past shareholders of a company.
The role of Companies House
Companies House has long accepted information submitted in good faith with little or no powers in terms of questioning or challenging. It is intended to bring forward proposals to give Companies House powers to query and possibly reject company names before they are registered. It is also intended to introduce an element of discretion on Companies House’s part in relation to the information submitted to allow then to query and ask for evidence where appropriate. It is hoped that this will increase the accuracy and reliability of information.
Changing the way in which accounts are filed
Possible future changes may include; confirming whether a company is small, medium or large; introducing new software used by other organisations; and reforming the rules on shortening the accounting reference period to once every 5 years and the need to produce evidence where a company is looking to align with a parent or subsidiary.
Many other issues were consulted on including, accessibility and storage of company records; whether requiring a note of a director’s occupation still held any value (it was considered that it did not); suppression of historic day of birth, residential address and signatures; and the striking-off of limited partnerships to bring this process in line with company arrangements.
Many of the proposed reforms will require legislation therefore the likely timescale for implementation and the exact details are unknown. We will keep you updated but in the meantime if you have any Companies House, filing or business queries, we will be happy to help, please contact Kirstin Ejsmont in the first instance at firstname.lastname@example.org.