When we reported on the changes implemented by the Small Business, Enterprise and Employment Act 2015 in an article some years ago, we noted that its aim was to enhance corporate transparency by, for example, the introduction of a register giving details of persons with significant control over a company (PSC Register).
It is questionable whether the way in which Companies House has since applied the changes has in practice provided more transparency or not but a new raft of reforms giving Companies House increased powers is currently being debated in Parliament with the same objective in mind.
Anyone who has ever tried to identify the shareholders of a company in recent years will know only too well that the replacement of the old Annual Returns with the “new” Confirmation Statements and Statements of Capital have made the job harder, not easier. Only time, then, will tell if the proposals in the new Economic Crime and Corporate Transparency Bill 2022 will provide more corporate transparency in practice.
So, what are the proposed reforms? In short, they include (among others):
- Expansion of the role and powers of the Registrar.
- The introduction of identity verification of all officers of the company (new and existing), as well as its persons of significant control.
- Improvement of financial information on the register.
- Enhanced data sharing with law enforcement, other government bodies and the private sector.
Some changes may be more welcome than others. For example, the removal of the requirement for companies to maintain their own register of directors, register of directors' residential addresses, register of secretaries and PSC register is likely to be a welcomed way to reduce the administrative burden on companies, particularly small ones. In contrast however, the requirement for micro-entities to file a balance sheet and a profit and loss each year is likely to be seen to be more challenging.
In a series of bite-sized articles, we will discuss the key proposals, with the first being on identity verification reform, which can be found here.