On 5 May 2019, the Department for Business, Energy and Industrial Strategy published a consultation paper seeking views from the general public (but particularly company directors, shareholders and the wider investor community) in relation to the biggest reforms of the Companies House regime since 1844.
One key aspect of the success of the UK's business environment relates to its regulatory frameworks, of which, since 1844, UK corporate entities have been required to provide information to a central register in order to provide transparency and accountability. At present, information is required to be filed regularly by corporate entities with the relevant Registrar of Companies (England and Wales, Scotland or Northern Ireland) supported by Companies House UK. Information submitted to Companies House is publicly available and in 2018 it was reported that it was accessed over 6.5 billion times – demonstrating the value of this free, accessible service.
Nevertheless, the current regime has received criticism on the basis that it is open to exploitation and information may not be accurately recorded. Noted concerns relate to the misuse of UK registered entities for money laundering purposes, falsified information being submitted to Companies House, fraudulent activity in relation to personal information recorded on the register as well as the lack of cross checks between Companies House and other official bodies.
The BEIS consultation paper seeks to address these criticisms by enhancing the role of Companies House and increasing the transparency of UK corporate entities.
The proposed package of reforms include:
The proposed reforms can only enhance the reputation of the UK corporate framework and give confidence to the business community and wider society when dealing with UK corporate entities and relying on information filed at Companies House. The developments would however require significant adjustments to the existing Companies Act 2006, a complete overhaul of the current practices upheld by Companies House and substantial practical implications would be experienced by all individuals who have responsibility for administering companies in the UK - officers, investors, advisors and third party agents. It is assumed that the proposed reforms could impact both the cost and the timing of processing of documents (currently a company can be incorporated on a same-day basis and a director can be appointed electronically within an hour) and the extensive reforms will undoubtedly take years to implement.
Whatever the outcome of the consultation, we consider that the majority of these changes are necessary to ensure that the UK retains its global reputation as a trusted, transparent marketplace.
The closing date for responses to the consultation is 5 August 2019. Responses can be provided on the UK gov website - we would encourage our clients to provide their views.
If you would like to discuss any of the issues raised above, please do not hesitate to get in touch with your usual DWF Corporate contact.
This information is intended as a general discussion surrounding the topics covered and is for guidance purposes only. It does not constitute legal advice and should not be regarded as a substitute for taking legal advice. DWF is not responsible for any activity undertaken based on this information.