Change is coming to corporate law with the implementation of the Economic Crime and Corporate Transparency Act 2023 (the “Act”). Regarded as the single biggest change to corporate law since the Companies Act of 2006, this Act brings transformation in corporate governance. It demands heightened accountability, adaptability, and transparency from businesses across the UK.

The original Economic Crime and Transparency Enforcement Act was initially aimed at combating economic crime and enforcing transparency. However, the Act faced challenges in adapting to evolving economic threats. The update was a clear progression to maintain its effectiveness.

Key changes at a glance

The Economic Crime and Corporate Transparency Act, which took effect in late 2023, introduces significant changes, including:

• Companies House enforcement: gained greater powers of intervention in the filing and listing of companies
• Enhanced identity verification: Directors and Persons with Significant Control (PSCs) will be required to undergo identity verification, with significant repercussions for those who do not meet requirements
• Overhaul of the filing process: only authorised individuals will be able to submit filings to Companies House, and the content required for submission is due to change

The objectives of the changes

Despite the complexity, the updates align with the objectives of the Act:

• Enhanced beneficial ownership (BO) disclosure: requiring more comprehensive information about the beneficial owners of companies for greater transparency
• Expanded scope of economic crime: updating and broadening the definition of economic crimes to cover a wider range of potentially illicit activities, including the introduction of the failure to prevent fraud offences
• Harsher powers of enforcement: strengthening mechanisms to ensure widespread compliance and fair play

The impact on running a Company

Business owners and Directors may be concerned about how the implications of these new responsibilities on corporate governance will impact the way they run their companies. Whilst the rules stand to identify and suitably address the ‘bad apples’, the Economic Crime and Corporate Transparency Act 2023 changes will still have a considerable impact on most businesses registered in the UK.

Business owners and Directors must address the impact of new responsibilities on corporate governance. To meet enhanced disclosure requirements, the identification of decision-makers must be crystal clear, requiring meticulous record-keeping and open communication with shareholders. Remaining vigilant against economic crimes will require the implementation of robust internal controls and regular risk assessments to shield against evolving economic crime risks.

Regulatory and compliance requirements

The regulatory landscape is also evolving, and to remain compliant, companies need to adapt swiftly. Compliance processes must be water-tight – staying on top of regulatory changes and reviewing internal procedures to ensure they meet the standards required by the Economic Crime and Corporate Transparency Act 2023 may be more easily said than done.

To keep pace with the evolving regulatory requirements, business owners and Directors must make quick adaptations, including:

• Maintaining up-to-date detailed records of beneficial ownership.
• Conducting thorough audits to identify and mitigate economic crime risks promptly.
• Keeping staff informed about regulatory and compliance changes through regular communication and training.

The first set of changes to be brought in under the Act will introduced on 4 March 2024. These changes will include changes to the rules around having a Registered Office, having an email address registered with Companies House, and companies will have to make a statement of lawful purpose. These changes will be required for all new companies incorporated in the UK, and every Company will be required to ensure they are meeting the new requirements by the time they next file a Confirmation Statement.

The need for expert guidance – how MSP Company Secretarial can help

While the Economic Crime and Corporate Transparency Act 2023 signifies a considerable shift in the way companies are governed, embracing these updates ultimately ensures a more transparent, accountable, and resilient corporate landscape. It’s not just a set of rules, but a tool to ensure fair play in the business arena. While the size, scale, and nature of these changes may make them seem daunting, embracing these updates will pave the way for a more transparent, accountable, and resilient corporate landscape. Navigating the complexity of changes may require expert assistance, such as that of MSP Company Secretarial.

MSP Company Secretarial can facilitate seamless adaptation, ensuring compliance and minimising business disruption, providing expertise in leading companies through new identity verification measures. Whilst the exact process and documents required are yet to be confirmed, MSP Company Secretarial will guide Directors and Persons with Significant Control (PSCs) through the process – helping to gather the necessary documentation and acting as a verification agent. Under the new law, verification must be undertaken by an Authorised Corporate Service Provider (ACSP), a registered, ‘relevant’ official representative of the company. Only ACSPs will be able to conduct verifications, and deliver a verification statement to Companies House. Additionally, certain types of company, such as limited partnerships, will be required to submit documentation and filings to Companies House via an ACSP.

MSP Company Secretarial can provide specialised guidance 

With over 30 years of experience serving clients, we can be the guiding hand to steady the ship. Our range of solutions is tailored to meet a variety of needs and budgets – with cost-effective options for businesses of every size and industry.

Whether ensuring accurate filings, identity verification, maintaining registers, or providing an appropriate registered office, MSP Company Secretarial ensures compliance and confidence. MSP Company Secretarial is also an Authorised Corporate Service Provider and is therefore able to fulfil identity verification requirements.

To find out more, take a look at our services, or get in contact.