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ECCTA Is Coming on March 4th 2024 – Are You Ready?

If you’ve been following Companies House on social media, you’ve probably noticed an increase in mentions of the Economic Crime and Corporate Transparency Act (ECCTA). Ignoring these seemingly boring posts can be perilous. Although most changes mentioned in the ECCTA won’t take effect for a few years, some new regulations will be effective from the 4th of March.

The ECCTA aims to strengthen the business environment within the United Kingdom and counter economic crime. CIFAS has welcomed the changes within the Act as an important step toward reducing fraud, and it contains the most significant changes to the Companies House registry in some time.

For all new companies incorporating from the 4th of March, this entails:

  • providing Companies House with a registered email address;
  • ensuring a registered office address that is an “appropriate address,” i.e., not a PO Box;
  • confirming that they are forming the company for a lawful purpose;

and for existing companies:

  •  complying with the above requirements within a transitional period; and
  • confirming that the company’s future activities will be lawful when filing their next Confirmation Statement.

It’s crucial to act on any correspondence sent to your registered email or office address immediately. Creating a new ‘Directors@’ style address ensures it’s promptly seen by the appropriate people. This eliminates the need to update the email address at Companies House every time there’s a change of personnel.
This email address won’t be available on the public records, although Companies House may share it with other government agencies if required.

 

What can you do to make compliance with ECCTA easier?

Whilst there is no date for the remainder of the changes to be implemented, it’s worth considering the following questions to make sure you are as prepared as you can be:

  1. Consider who files your documents at Companies House.

All new and existing directors and people with significant control (PSCs) must have their identities verified with Companies House. If you have a company secretary who files your documents, they will also need verification.

Note that only UK entities will be able to file documents at Companies House, and identity verification also applies to directors of dormant companies.

  1. Check if your Register of Members is up to date.

Under the new regulations, the Register of Members will become the only register that companies are required to maintain. You’ll need to provide a one-off list of all your shareholders with the first Confirmation Statement you file after these new regulations come into effect.

However, don’t discard your other Registers just yet, as you’re still obligated to keep and maintain them until the Act is fully implemented, and it’s likely you’ll need to keep them on file for several years.

  1. Understand the new rules around submission of accounts and prepare for digital.

All companies will need to submit their accounts digitally (with iXBRL tagging). Abridged accounts are being removed, and all small companies and micro-entities will be required to file annual accounts that include a balance sheet and profit & loss.

If you’re a micro-entity, you’ll have the option to include a directors’ report, but it must be included with all other annual accounts. It’s wise to seek professional advice to ensure your future annual accounts will be in the correct format.

  1. Prepare for changes in your use of corporate directors.

There will be identity verification requirements for, and restrictions on the use of, corporate directors. If your company has a corporate director, the directors will be required to have their identity verified, and it cannot itself have a corporate director.

Once the new rules come into effect, any corporate director you have must be a UK entity. There will be a transitional period to give you time to review how your company is organised, but it’s worth considering now. In the future, there may even be a total ban on corporate directors.

 

So, what’s next?

While Companies House has yet to publish the date for the implementation of the remaining requirements, it’s important to start considering them now. That way, you can ensure compliance when the time comes.

At Clarke & Son, we can work with you to understand what the new regulations mean and to help you get ready. Our team of dedicated and experienced staff will provide a company health check and more information about what the changes mean for you specifically.

If you require assistance, don’t hesitate to reach out to our Corporate Commercial team.

 

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