Following the adoption of the Economic Crime and Transparency Act in October 2023, Companies House has been preparing to introduce new measures brought in by the Act.
We’ve been discussing the issue in detail with some of you, but I wanted to go into some more depth in an article that is accessible to all.
While the new regulations aren’t complex – in most cases – they could have an impact on your business, and you may need to do a few things to remain compliant.
Companies House is the public registrar which holds the information that companies are legally obliged to submit and makes it accessible to the public. These obligations have traditionally encompassed the submission of annual returns and financial statements, alongside maintaining up-to-date records of directors and shareholders.
However, with the introduction of the new Act, significant changes to this have now come into effect. The modifications are designed to strengthen the UK's defences against economic crime, enhancing corporate transparency and accountability – though how successful they will be in accomplishing this (undoubtedly desirable) aim remains to be seen.
Three of the most important changes likely to impact SMEs are as follows:
New regulations for registered office addresses
You are now required to have an 'appropriate address' as your registered office.
This means the address must be one where official documents are guaranteed to reach an individual acting on behalf of the company, ensuring better accountability and traceability.
From 4 March 2024, the use of PO Box addresses for this purpose is no longer be permissible, so you might need to switch to an address that fulfils the new requirements.
Companies using a PO Box must update their registered office address through Companies House's online platform, using their company's authentication code.
Requirement for a registered email address
Another pivotal change is the mandatory requirement for all companies to register an email address with Companies House.
This email address will serve as a primary communication channel for important notifications and updates, with the assurance that this information will remain confidential and not be disclosed publicly.
New companies will need to provide this information upon incorporation, while existing companies are required to submit their registered email address at their next confirmation statement from 5 March 2024.
This ensures that all companies have a reliable and secure method of communication with Companies House.
Introduction of “lawful purpose statements”
Another significant update impacting newly formed companies is the introduction of so-called “lawful purpose statements.”
Companies must now declare that they are forming for a lawful purpose at incorporation and confirm that their future activities will continue to be lawful in their confirmation statements.
This requirement aims to clarify that all companies registered with Companies House have a duty to operate within the law.
What are the implications for your business?
These changes mark a significant move intended to enhance corporate accountability and transparency in the UK. Impacts on your company might include:
- Operational impact: Adjusting to these new regulations may require changes to your business's operational processes, especially in how you manage and update your company's registered information with Companies House.
- Preparation is key: To avoid potential penalties, you’ll need to stay informed about these changes and prepare accordingly to ensure compliance by the set deadlines.
- Promoting transparency: The overarching goal of these regulations is to create a more transparent and trustworthy business environment in the UK, contributing positively to the broader fight against economic crime.
The latter point on transparency is probably worth going into in more depth.
The focus on transparency with the new regulations means you'll need to take proactive steps to maintain and enhance your business's openness.
First, regularly audit your registered information with Companies House to ensure that all data, including office addresses and email contacts, are up to date and accurate.
Adopting transparent reporting practices, such as providing clear and comprehensive financial statements and corporate governance reports, is also going to be crucial.
(These practices not only aid compliance with regulatory requirements but also help build trust among your stakeholders).
You’ll also need to engage in open communication with your shareholders, employees, and customers by providing regular updates on your company's operations and developments.
We also recommend that you work with your accountant on this as we can help you navigate the complexities of regulatory compliance, ensuring your reporting and tax obligations reflect the highest standards of transparency.
If you require further information on your reporting requirements, please contact one of the Scholes CA team.
Call: +44 (0) 1856 872983 or email: enquiries@scholesca.co.uk
