Security and protection is at the heart of proposed new sweeping powers at Companies House.
Proposals are currently being reviewed for major changes at Companies House. The proposals will affect private limited company registered in the UK.
You may not be a director or a shareholder of a private limited company, although the proposed changes in this article may be of interest to you.
These proposals would be the biggest upgrade in the Companies House system since the Register of Companies was created in 1844 and fundamentally increase the powers of Companies House
Companies House currently does not have any legal power to check the accuracy of submissions. They accept most data and documents submitted without any checks. The belief is that by linking with other government agencies that the potential for misuse will reduce and help to ensure robust enforcement action.
Data collection department
Companies House is a government department that really only collects data about companies registered in the UK. This includes directors’ names, home addresses, dates of birth and copies of annual accounts from companies. Some of the data is available free of charge. Other data is not available to the public. It is acknowledged that Companies House must move away from its traditional role of just accepting information and rarely dealing with inaccuracies, whether intentional or by mistake.
The aim is to reduce fraud and misuse of information. It is proposed that the systems at Companies House will be redesigned and rely heavily on HMRC's Connect computer system and other government systems.
A recent review found that these registers listed 2,000 persons who were disqualified directors, other individuals on the US sanctions list, individuals controlling more than 6,000 companies, and of the 4 million UK companies in existence more than 300,000 claiming that they did not have or could not find the beneficial owners. This is clearly a concern. This could be because the company owners do not wish to be identified. It is quite possible that companies are not aware of this requirement for transparency of and therefore fails to update Companies House. I think the latter will be one of the major reasons.
These new procedures are expected to increase the annual levy for all companies.
Changes highlighted
Verification
Companies House has never had the powers to confirm that the information supplied is correct. Verification procedures for directors and major shareholders would be required.
Some intermediaries e.g. accountants are required by law to assess money laundering risks and illegal intentions of new company managers and owners. Companies House wish to use this information when companies use agents to form companies and update subsequent filings.
Details of the intermediary’s supervisory body and registration number may need to be filed at Companies House. If prospective directors are unable to verify their identity then Companies House would refuse company formation and impose a penalty for non-compliance. It is intended that all directors will have a unique identifier number to be used each time that they are appointed to a company.
Personal information
Companies House is prohibited from disclosing directors' home addresses but that may change. Access may be restricted to Companies House officials but also to law enforcement agencies. More information will be required about shareholders on company formation.
Registered office addresses
Directors have the option of showing a separate service address on the public register, therefore keeping their home address private. In future, an application will not be considered where the residential address is a live company’s current registered office address.
In 2017 Companies House received over 7,000 applications to replace the registered office shown on their records because companies were using other people’s addresses without permission. It is intended that companies will be required to prove that they have permission to use an address as their registered office.
Signatures
Signatures can be copied from documents filed on the public register at Companies House. It is intended that in future that records will not show the actual signature.
Number of directorships
Companies House are concerned that some directors hold a very large numbers of directorships. These may not really be the directors of the companies listed. Should a cap be placed on the number of directorships that an individual may hold?
Comparing like with like
Companies House and HMRC should wake up to the fact that sometimes the accounts submitted to Companies House differ from those submitted to HMRC.