The ECCTA 2023 – Get ready for identity verification and corporate director restrictions

We previously reported here that the ECCTA will introduce mandatory identity verification of (amongst others) directors and owners of UK companies.

Identity verification

• ‍What? The ECCTA introduced new measures under which all company directors, persons with significant control (PSCs), individuals who deliver documents to Companies House and certain officers of other legal entities must have their identity verified. ‍
• How? Verification can be done online or through an anti-money laundering supervised authorised corporate service provider (ACSP). It is intended that Simkins will become an ACSP or will partner with an ACSP in order to provide this service.‍
• When? From 18 November 2025, verification will become mandatory for all PSCs and directors upon appointment or company incorporation. For other relevant individuals (including existing directors and PSCs), there will be a 12-month transitional period in which verification must be completed before submission of a company’s next Confirmation Statement.

In addition to the above, the ECCTA has introduced certain restrictions on corporate directors.

Corporate director restrictions

• What? Under the new rules, only UK-registered corporate entities can be corporate directors of UK companies. A corporate director must have a board composed of all-natural persons, all of whom must have had their identities verified for the corporate director to be validly registered.
• When? The exact timing of the rollout of this measure has not been confirmed, but it is anticipated to take effect in late 2025.

Comment

Although not all of the above measures will apply straightaway, we recommend that companies consider reviewing and making appropriate changes to their current structures and getting ahead with the verification process to minimise disruption to their businesses and to prevent potential breaches.

If you would like to discuss how we can assist with the process, please contact either Giao Pacey or Louise Jordan.

Additional resources

For more insight into the reforms that have come into force and for those expected to be introduced, our previous articles can be found here:

• Identity Verification Reform
• Proposed civil and criminal sanctions for breach of the Companies Act
• Proposed introduction of discrepancy reporting requirements for all businesses
• Expanding the role of the Registrar
• The Economic Crime and Corporate Transparency Act 2023 receives Royal Assent
• Measures in the Economic Crime and Corporate Transparency Act come into force
• Tackling the new Failure to Prevent Fraud Offence: What the Sport Industry Needs to Know