Scheduled for its third reading in the House of Lords on 4 July 2023, the Economic Crime and Corporate Transparency Bill seeks to reform the powers of Companies House to better equip it to tackle money laundering and economic crime.
The proposals introduce new criminal offences as well as amendments to existing ones. If passed, the Secretary of State will also have powers to establish secondary legislation allowing the Registrar of Companies House to impose fines and penalties directly on directors and companies for non-compliance with their legal obligations. The Registrar would do this when it determines, beyond reasonable doubt, that an offence has been committed under the Companies Act 2006.
The new penalty and sanctions regime will allow the Registrar to effectively side-step the court system, giving it greater freedom to choose between pursuing financial penalties or referring matters to law enforcement for criminal matters.
What will constitute an offence for companies?
Notable proposals include new and updated criminal and civil offences for companies and/or their directors failing to:
- respond to requests for information from Companies House;
- have an ‘appropriate address’ as a registered office address;
- provide a registered email address;
- respond to a direction to change a company’s name; and
- protect personal information (Click here for our bite-sized article on the proposed identification verification reform).
What will the fines look like?
The Government has suggested that civil penalties may include a fine of £100 per day, up to a maximum of £10,000.
When will we see these measures in action?
In short, not immediately. The Bill is widely expected to receive Royal Assent soon, but secondary legislation will need to be passed to introduce many of the above proposals.
What should you do?
Now is the time to eradicate any practice that might be considered ‘low-level’ and introduce procedures that ensure best practice is maintained regarding all Companies House requirements. Directors should prepare for a much more active penalties regime in the future.
This is only one of a series of reforms that are being proposed (see our article for other proposals).