10/06/24

Economic Crime and Corporate Transparency Act 2023

Economic Crime and Corporate Transparency Act 2023
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The Economic Crime and Corporate Transparency Act 2023 ('the Act') is UK legislation aimed at strengthening the government’s ability to combat economic crime and enhance corporate transparency.

Key provisions of the Act include, increased reporting, enhanced protections for whistleblowers and tighter regulations on the formation and operation of companies, amongst other things. Additionally, the Act grants law enforcement agencies powers to investigate and seize assets linked to economic crimes, such as money laundering and fraud.

The goal of the Act is to create a more transparent corporate environment, making it harder for individuals and entities to engage in economic crimes, while providing authorities with better tools for detection and enforcement.

In this article, Hamraj Kang of KANGS focuses upon a number of important administrative features within the Act.

Important Administrative Considerations

Filing/Notification

In pursuit of greater transparency, companies:

  • are required to provide more information about Subscribers.
  • must file a Statement of Verification that no named Director is disqualified or unable to act as Director and that the company is being incorporated for lawful purposes.
  • will be required to maintain an active email address and an ‘appropriate’ registered address.
  • are required to notify Companies House of any change of Directors and other company information. The former use of Local Registers has been abolished.

Verifying ID

Verification of the Identity of the following must be provided:

  • Subscribers,
  • Officers and Directors,
  • Proposed Directors of companies prior to incorporation,
  • New Directors of existing companies,
  • Persons with Significant Control,
  • Any individual who is going to file documents at Companies House.

and failure to comply may be penalised.

ID is verified either with Companies House directly or by an ‘authorised corporate service provider’.

Corporate Directors

A ‘Corporate Director’ is required to provide the ID of all its directors who are natural persons, within twelve months failing which it will be banned.

Shareholders

Private companies and traded companies, where shareholders hold at least 5% of issued shares, must provide a Shareholder List with its first Confirmation Statement following the reform.
The annual Confirmation Statement must verify that the company’s future activities will be lawful.

A company’s Register of Members must include each a Shareholder’s full name and a service address.

Small Companies and Micro-Entities

Such companies are now required to:

  • file Profit and Loss accounts, which will not be available to the Public. The option to file abridged accounts has been removed.
  • file a Director’s Report, although this is optional for micro-entities.

Company names

A company or company name will not be registered, or may be removed, if the Secretary of State believes that:

  • it creates the false impression that the company is connected with a foreign government or agency, or an international organisation whose members include two or more countries or territories.
  • it is intended to facilitate an offence, or involvement in dishonest or deceptive conduct.

Limited Liability Partnerships

In the light of concern for their misuse, Limited Liability Partnerships:

  • will be unable to appoint partners who are disqualified,
  • must declare an acceptable appropriate address,
  • must file annual Confirmation Statements,
  • will be obliged to submit accounts,
  • will be required to maintain a connection to the UK.

Register of overseas entities

The Act, introduced the obligation for overseas entities who own land or property in the UK to:

  • register a beneficial owner of that land, who will be subject to verification checks,
  • file a yearly statement confirming the information remains correct.

Liability to comply with such obligations may result in serious consequences for both the company and the person responsible. Companies who fail to fulfil their obligations will be unable to sell or purchase UK property and land.

How Can We Help?

Those changes made by The Economic Crime and Corporate Act, which are not already in operation, are expected to be in force by the end of 2024.

Failure to comply may result in proceedings being pursued against both companies and officers and, accordingly, it is important that an understanding of the new requirements is gained immediately.

If you need assistance determining how you or your company may be affected, or if receive any form of Notice alleging non-fulfilment of any of the above obligations, the Team at KANGS will be delighted to assist.

Our Team offers vast experience gained from assisting clients tackling issues arising from company activity of every nature. If you need support or guidance, contact us using the details below:

Tel:       0333 370 4333

Email: info@kangssolicitors.co.uk

We provide initial no obligation discussion at our three offices in London, Birmingham, and Manchester. Alternatively, discussions can be held through live conferencing or telephone.

Hamraj Kang

Hamraj Kang
Senior Partner

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Tim Thompson

Tim Thompson
Partner

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John Veale

John Veale
Partner

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