The Government has provided a response to the Corporate Transparency and Register Reform consultation, which ran from 5th May 2019 to 5th August 2019. This response was published on 18th September 2020.

Companies House has noted growing instances of misuse of companies, concerns over the accuracy of the companies register and challenges to the safeguarding of personal data on the register. The proposed reforms are designed to tackle these concerns by improving the accuracy and value of information on the register, expanding the role and powers of Companies House, enhancing ownership transparency, providing greater personal information protection, deterring abuse and providing a more streamlined and digital process.

Identity Verification

The Government will proceed with the verification requirement proposal, whereby Company directors, Persons with Significant Control (PSCs) and any ‘presenter’ of information will be required to complete identify verification. Once verified, individuals who have multiple roles will be able to be linked easily.

Failure to verify will constitute an offence; sanctions are anticipated to be in line with those for existing PSC offences.

This proposal will only affect company directors who are individuals; the Government will further consider how it can be applied to companies owned and controlled by legal entities.

Improving Accuracy

The Government is to develop a policy to give the Registrar new querying powers and will consult on this further in due course.

A reform of company accounts is also proposed, to include restrictions on how often a company may shorten its accounting period and to align the accounts with HMRC. The Registrar’s limited powers to amend information already on the register would also be extended and the current administrative procedures (which require an application to Companies House or a court order) will be simplified.

All dissolved records since 2010 are proposed to be available in 2021. Companies House will also be working towards enabling 20 years of free records, however, this will require further legislation.

Protection of Personal Information

A Director’s occupation will no longer be listed. Additional information which will be able to be suppressed is:

• Profession;
• Signatures;
• Day of date of birth;
• Residential address; and
• Previous name after gender change.

There is a proposal to extend Companies House powers to share residential addresses with law enforcement agencies (if there is a suspicion of fraud) and for additional verification information to be shared with credit reference agencies, where appropriate, subject to addressing data privacy concerns.

Deterring Abuse

Proposals to deter abuse include:

• reporting obligations on bodies that fall under the AML Regulations, in the event of discrepancies between information on the public register of companies and information held by such bodies;
• “legislative gateways” to enable cross-reference of Companies House information against other data; and
• the creation of a process whereby limited partnerships can be “struck off” the register at Companies House by court order.

Operational Transformation

• Automating incorporation processes through new digital checks;
• A single account, allowing customers to access all services relevant to them from one place;
• Improved customer journeys through Companies House webpages;
• Replacing antiquated payment services; digitising the remaining paper-based filings.

When?

A comprehensive set of proposals will be published setting out how Companies House believe these reforms should be implemented. Some of the proposed reforms will need further consultation and others will require new legislation. Companies House intend to have the Identity Verification user testing in place by the end of the 2020/2021 financial year.

Further information

The aim of these proposals is well intended, however, this does still need to be balanced against the need to ensure that businesses are not caught in reems of red tape at the expense of actually doing business, There is still detail to be worked out and Companies House will need to be adequately resourced to enable implementation.

Should you have any queries or require any assistance please contact your usual Druces representative or: 

• Nicole Hopson at +44 (0)20 7216 5514 or n.hopson@druces.com