In February, Companies House released their most recent White Paper, ‘Corporate Transparency and Register Reform.’
Companies House, the UK body that operates a flexible corporate registration framework allowing hundreds of thousands of companies to be formed each year and managed with relative ease is due to experience its biggest shake-up yet. The idea, as Robert Lowe, Vice President of the Board of Trade, introducing the Joint Stock Companies Bill to Parliament on 1st February 1856 put it, is that we ‘should not throw the slightest obstacle in the way of limited companies being formed…and when difficulties arise, to arm the courts of justice with sufficient powers to check extravagance or roguery in the management of companies, and to save them from the wreck in which they may be involved.’
To summarise the reforms, Companies House are coming down hard on fraudulent ‘shell’ companies and partnerships that allow criminals to appear ‘legitimate’ and commit crimes, corruption, including money laundering, fraud and identity theft. The government has big plans to end this ‘abuse.’
It turns out work is already underway behind the scenes at Companies House to put this plan into action enabling improvements in user experience and its own digital capabilities. Companies House plan to release legislation on this topic soon.
Here’s what we know so far
- Companies House are dead set on maintaining the integrity of the register of companies and the UK business environment. They’re arming the Registrar new powers to enable this which will include the power to query suspicious appointments or filings and, in some cases, request further evidence or reject the filing altogether. Companies House will also look to share data with law enforcement, government bodies and the private sector if they suspect anything untoward.
- If we’re (or anyone else is) setting up, managing and/or controlling your company, we’ll need to ensure our own identity is verified with Companies House. This aims to prevent any anonymous filings.
- The introduction of data suppression will allow for personal information that is public on the register to be suppressed if you’re able to provide sufficient evidence that the information remaining public puts you at risk of harm.
- There are plans to improve the financial information on the register, which will ultimately lead to better financial management practices within SMEs, encourage digital reporting and helping the government’s efforts to combat economic crime.
The overall idea here does not in any way suggest that it will be more difficult to register and manage a company, but it most certainly introduces a few hurdles that will impact how things are done moving forwards.
The UK is a powerhouse for start-ups with up to 2000 companies formed each day. Long may that continue!
Tend Legal, London