By Peter Windat – accountant and insolvency practitioner at BRI Business Recovery and Insolvency
The work and practices of Companies House, the repository for all information on the majority of the UK’s companies and similar registered entities, is currently under review. In May, the Department for Business Energy and Industrial Strategy issued a consultation about options to reform the body and change is coming.
In recent years concerns have grown that the UK’s framework is open to misuse. Concerns arise mainly from four interrelated issues – misuse of UK companies by international criminals and corrupt elites; the accuracy of information held at Companies House; the abuse of personal information on the register; and the limited nature of cross checks between Companies House and other public and private sector bodies.
Given a span of 80 pages much is covered, and the view is clearly that much work needs to be done to help keep the UK in the leading pack of countries in which it is desirable to start and grow a business.
Know who’s managing
The government is proposing that individuals who have a key role in companies should have their identity verified. This would apply to company officers (directors), People with Significant Control (PSCs), and those filing information.
It should be possible to introduce such identity checks simply but there are also important data protection issues.
The consultation sets out why greater certainty over the identity of those shown as owning, running or controlling companies is needed, it shows how new technology offers the opportunity to obtain greater assurance over identities, and sets out far-reaching proposals to introduce identity checks for those who file information on the register, directors, PSCs and, on a voluntary basis, shareholders.
This document proposes a series of reforms that would deliver better quality information on the register – including extending the powers of Companies House to query and seek corroboration on information before it is entered on the register and making it easier to remove inaccurate information. In addition, the government is proposing improvements to the process and delivery of annual accounts to Companies House. The government intends to maintain the current approach to retaining records of dissolved companies on the register for 20 years from dissolution.
The government has outlined how Companies House will store information if its proposals are adopted. Under identity verification proposals, access to the register will be carefully managed, allowing only identified or authorised persons to file information. New processes are proposed for sensitive information to be protected. Proposals to allow directors some additional rights to suppress their information from public view have also been set out.
Information on the register should be of real, practical use to those who wish to find out information about those taking advantage of the privilege and protection of limited liability. However, information on the register should not become a tool for abuse and so information of a sensitive personal nature will not be made publicly available.
Companies House data on UK corporate bodies could be improved through cross checks against data held by other government and private sector bodies. The government wants to see the exchange of intelligence made easier in order to enable greater sophistication in identifying possible criminal behaviour. This will lead to faster identification of anomalies between data at Companies House and elsewhere.
Also sought were views on several related measures that might deter abuse of UK legal entities, including ending the business activities of limited partnerships which are being misused, imposing limits on the number of directorships any one individual can hold, disclosure of banking information and action to deter misuse of company names and addresses.
The routine cross-checking of information on the companies register against external data sets and powers to obtain feedback on discrepancies identified is proposed alongside adopting a risk-based approach to the sharing of intelligence with police and requiring firms to provide bank details.
The proposals in the consultation, if implemented in full, would amount to the most significant reform of the UK’s company registration framework since a register was first introduced in 1844 and go to the core of the Companies Act. There will be an impact on the fees levied by Companies House, though the government fully expects them to remain very low compared to international standards.
The transformation will touch every aspect of Companies House’s work, covering both customer-facing and internal digital systems.
Although responses to the proposals were required by August 5, there will be a little leeway for late submissions.