Here are the new powers for Companies House that come into force today

The first set of powers from the Economic Crime and Corporate Transparency Act 2023 is set to come into force on Monday, as changes to Companies House come into play.

The new legislation was promised to make it easier to crack down on financial crime with several new provisions, including for Companies House. The new law aims to reform the registrar to prevent the creation of, and shutting down, fraudulent companies.

“These powers have been described as the biggest shake-up to the service in its 180-year history”, Richard Cannon, Partner at Stokoe Partnership Solicitors argued.

Dr Ryan Cushley-Spendiff, lecturer at Nottingham Law School highlighted that “As of Monday, Companies House is going to be invested with a litany of powers that will give them increasingly expansive oversight.”

The new law will see changes to a company formation as there will be a requirement for a company to maintain an email address that Companies House can use to communicate with it. Companies will also have to have an appropriate registered office, and are no longer allowed to use a PO box.

Rachel Sexton, head of UK Ashurst risk advisory, explained that before these reforms, the registrar did not verify the accuracy of information that was submitted by companies which registered with them.

“As a result, it has been possible for criminals to establish and control companies without declaring their true identities. This has long been criticised as a weak link in the fight against economic crime in the UK,” she added.

While the law will also give greater power to the registrar to query, reject, clarify and remove information from the register, according to Nicholas McVeigh, managing associate at Mishcon de Reya, “historically, Companies House’s role has been one of passive administrator rather than proactive gatekeeper, and it has had limited powers.”

“The exercise of its new powers will be a major change in practice for Companies House and, so far, there has been limited guidance on exactly how the powers will be used. The scale of the undertaking likely means that it will take time before we notice a big difference to the accuracy and integrity of the register,” he added.

Vanessa McGoldrick, European counsel at Skadden stated that the new law means “Companies House will have more powers to share information with law enforcement agencies.”

“We have seen an increase in Companies House’s appetite to use its prosecutorial powers – we have a number of these cases at the moment – and that trend looks set to continue,” Ruby Hamid, partner at Ashurst added.

Giao Pacey, partner at Simkins pointed out that these measures, along with others to be introduced from the law over time, are likely to create heavy administrative challenges for the many SME businesses.

“Only time will tell how effectively and proportionately Companies House will use its newly obtained powers,” she added.

Vincent Billings, partner at SA Law said: “The aim is to create better transparency and remove the presence of so-called ‘Mickey Mouse’ companies.” However, he warned that “this is a source of anxiety for many company directors, who are worried about being caught in a position where they have failed to comply with the new laws.”

Jason Woodland, committee member of the London Solicitors Litigation Association also pointed at that with all new obligations on directors, he suggested that there is scope for things to go wrong and for litigation to follow.

“Compliance with these new requirements will come under close scrutiny by unhappy shareholders and third parties when companies fail or are in financial difficulty, particularly where fraud is involved. Company directors will need to check the new requirements carefully and not rely on past practice,” he explained.

“These changes move Companies House away from being just a record keeper to what it hopes will be a more active gatekeeper,” McGoldrick noted.