United Kingdom | Publication | March 2024
On 29 February 2024 the second commencement regulations under the Economic Crime and Corporate Transparency Act 2023 (ECCTA) were made. These bring into force a number of important company law changes (through changes to the Companies Act 2006 (CA 2006) and other legislation) with effect from 4 March 2024.
The changes coming into effect from 4 March 2024 include the following:
Powers of the Registrar of Companies (Registrar): As well as introducing new objectives for the Registrar which are concerned with promoting the integrity of the registers at Companies House, to support this the Registrar has been given a number of new powers which are now effective. These include powers to reject documents for inconsistencies, to require additional information and to remove information from the register.
Company incorporation: The subscribers on incorporation of a new company will need to confirm that they wish to form the company for a lawful purpose.
Company names: Greater restrictions on company and business names have been introduced, so, for example, companies cannot be registered with names the Secretary of State believes are intended to facilitate criminal purposes, with names suggesting a connection with a foreign government (or agency or authority of a foreign government) or international organisation, or with names containing computer code. The Registrar also has enhanced powers to direct company name changes and change them where a direction is not complied with.
Appropriate registered office and email addresses: All companies must maintain an “appropriate” registered office (being one where a document addressed to the company, and delivered there by hand or by post, would be expected to come to the attention of a person acting on behalf of the company, and the delivery of documents there is capable of being recorded by the obtaining of an acknowledgement of delivery) and an “appropriate” email address. The email address is one that will not be made public but it must be one that, in the ordinary course of events, emails sent to it by the Registrar would be expected to come to the attention of a person acting on behalf of the company. Companies will need to provide this email address to the Registrar when they deliver their first confirmation statement with a confirmation date after 4 March 2024.
Directors and disqualification: A person may not be appointed a director of a company if that person is disqualified under the directors’ disqualification legislation (as defined) and anybody who has been appointed as a director will cease to hold office by virtue of that appointment if they become disqualified under the directors’ disqualification legislation.
Register of members: A new ground enabling the court to rectify the register of members has been introduced. This provides that if a company’s register of members does not include information that it is required to include or includes information that it is not required to include, then the person aggrieved, or any member of the company, or the company, can apply to the court for rectification of the register.
Confirmation statement: Where a company makes a confirmation statement it must at the same time state that the intended future activities of the company are lawful, and where a company makes its first confirmation statement, and by the time of its incorporation the company’s principal business activities had changed from those specified in the registration statement supplied when the company applied to the Registrar for registration, that change must be notified with the first confirmation statement.
Reduction of share capital: On a reduction of capital confirmed by the court, it will no longer be necessary to deliver the court order to the Registrar and a copy of the court order can be delivered.
New general offences and penalties: As well as a basic offence of delivering to the Registrar, without reasonable excuse, a document that is misleading, false or deceptive in a material particular, there is a new aggravated offence. This will apply where someone knowingly delivers, or causes to be delivered, to the Registrar a document that is misleading, false or deceptive in a material particular, or makes a statement to the Registrar that is misleading, false or deceptive in a material particular. The penalties for this and other offences under the CA 2006 are being increased and will include financial penalties that the Registrar can impose.
Register of overseas entities: Any overseas entity allocated an overseas ID entity by the Registrar under the Economic Crime (Transparency and Enforcement) Act 2022 before 4 March 2024 will need to take account of amendments made to that 2022 Act by section 161 (Registrable beneficial owners: cases involving trusts) and section 162 (Registrable beneficial owners: nominees) when they deliver statements and information to comply with their updating duty under section 7 of the 2022 Act on the first occasion after 4 June 2024.
At the same time, the Small Business, Enterprise and Employment Act 2015 (Commencement No. 8) Regulations 2024 were made. These bring into force section 87 of the Small Business, Enterprise and Employment Act 2015 so as to bring into force section 156B CA 2006. This contains a power for the Secretary of State to make regulations which set out circumstances in which a person who is not a natural person (so a corporate entity) can be appointed a company director. Those further regulations are awaited.
A number of updated Factsheets providing information about different measures in ECCTA can be accessed here. Companies House has also updated a number of its sets of guidance on registering, filing and delivering information to Companies House, as well as certain Companies House filing forms, in light of the CA 2006 changes implemented.
On 29 February 2024, regulations were made that establish the process by which the Registrar of Companies (Registrar) is able to change a registered service address of a company director, secretary or person of significant control to a “default address” if satisfied that address does not meet the requirements of section 1141(1) and (2) Companies Act 2006 (CA 2006).
Section 1141 CA 2006 states that a “service address” for a person is an address at which documents may be effectively served on that person and the conditions which a service address must comply with (as specified by regulation 10 of the Companies Act 2006 (Annual Return and Service Addresses) Regulations 2008) are that the service address must be a place where the service of documents can be effected by physical delivery, and the delivery of documents is capable of being recorded by the obtaining of an acknowledgement of delivery.
In line with a key objective of the Economic Crime and Corporate Transparency Act 2023 (ECCTA), which is to reform the role and powers of the Registrar, including in respect of the accuracy and legitimacy of the information pertaining to companies on the register, a new section 1097B was inserted into the CA 2006 by ECCTA which allows the Secretary of State to change the registered service address of a company director, secretary or person of significant control if satisfied that address does not meet the requirements of section 1141(1) and (2) CA 2006.
These regulations establish the process by which the Registrar may change a registered service address to a “default address” nominated by the Registrar, either on the Registrar’s own motion or following an application from a third party. A relevant person who has had their registered service address changed to a default address commits an offence if they do not take all reasonable steps to ensure that notice is given by the relevant company to change the address to a new address within the compliance period, being 28 days beginning with the day on which the relevant person was given notice of the change (unless an appeal is brought within that period).
These regulations have been made In line with a key objective of the Economic Crime and Corporate Transparency Act 2023 (ECCTA), which is to reform the role and powers of the Registrar, including in respect of the accuracy and legitimacy of the information pertaining to companies on the register.
The regulations came into force on 4 March 2024 when section 106 ECCTA came fully into force.
(The Service Address (Rectification of Register) Regulations 2024, 29.02.2024 and Explanatory Memorandum)
On 29 February 2024, regulations were made that establish the process by which the Registrar of Companies (Registrar) is able to change a company’s registered office address to a “default address” nominated by the Registrar, either by the Registrar’s own motion or following an application from a third party. The power to change the address is available where the Registrar is satisfied the registered office address is not an “appropriate address” as defined by section 86(2) Companies Act 2006 (CA 2006).
The regulations also provide a mechanism by which the Registrar can strike a company from the register of companies where the company fails to give notice within the compliance period specified in the regulations (broadly, 28 days beginning with the day on which the registered office address is changed unless an appeal is brought within that period) of a new address as its registered office address which is an appropriate address. This is to prevent companies “squatting” at the default address.
Criminal offences will be committed by companies and their officers in default where a company which has had its registered office changed by the Registrar to a default address does not change its registered office to an appropriate address within the compliance period.
These regulations have been made In line with a key objective of the Economic Crime and Corporate Transparency Act 2023 (ECCTA), which is to reform the role and powers of the Registrar, including in respect of the accuracy and legitimacy of the information pertaining to companies on the register. One of the aims of the regulations is to prevent the misappropriation of individual residential addresses which some companies then use as their registered office.
The regulations came into force on 4 March 2024 when section 105 ECCTA came fully into force.
(The Registered Office Address (Rectification of Register) Regulations 2024, 29.02.2025 and Explanatory Memorandum)
On 29 February 2024, regulations were made which amend and supplement the Limited Liability Partnerships (Application of Companies Act 2006) Regulations 2009 (2009 Regulations). These were made under the Limited Liability Partnerships Act 2000 (2000 Act) to apply some provisions of the Companies Act 2006 (CA 2006) to limited liability partnerships.
These regulations are part of a series of Statutory Instruments being made following the Economic Crime and Corporate Transparency Act 2023 (ECCTA).
As a result, the amendments to the 2009 Regulations concern the application of provisions of the CA 2006 relating to a company’s name, a company’s registered office and email address, a company’s directors, annual confirmation of accuracy on the register, information about Persons with Significant Control, dissolution and restoration to the register, the Registrar of Companies, and business names, as well as certain consequential and supplemental amendments to the 2000 Act.
The regulations came into force on 4 March 2024 when section 1 of ECCTA came into force.
These regulations only concern the application of provisions of the CA 2006 commenced in ECCTA’s first two Commencement Regulations (S.I. 2023/1206 and SI 2024/269). Further provisions will be applied in due course as more company-related provisions of ECCTA are commenced. More information can be found in this Factsheet relating to the impact of ECCTA on limited liability partnerships.
(The Limited Liability Partnerships (Application of Company Law) Regulations 2024, 29.02. 2024 and Explanatory Memorandum)
On 29 February 2024, the Principal Office Address (Rectification of Register) Regulations 2024 were made and published with an Explanatory Memorandum. They relate to new section 1097C Companies Act 2006 which is set out in the Economic Crime and Corporate Transparency Act 2023 (ECCTA).
Directors and secretaries of companies, and persons with significant control over companies (“relevant persons”), are required to notify the Registrar of Companies of the address of their principal office. These regulations establish the process by which the Registrar may change an address registered as the principal office of a relevant person to a “default address” nominated by the Registrar, either on the Registrar’s own motion or following application from a third party. The power to change the address is available where the Registrar is satisfied the address is not in fact their principal office.
The regulations give the Registrar discretion whether to change the address without notice or to provide for a period for objections. If the Registrar decides to permit an objection period, the Registrar has discretion as to the length of that period.
A director, secretary or person with significant control over a company who, having had their principal office address changed to a default address by the Registrar, does not take reasonable steps in a compliance period laid down in the regulations to ensure the company notifies the Registrar of their actual principal office address commits an offence.
The regulations came into force on 4 March 2024 when section 107 of ECCTA came fully into force.
(The Principal Office Address (Rectification of Register) Regulations 2024, 29.02.2024 and Explanatory Memorandum)
On 5 March 2024, the Explanatory Notes to the Economic Crime and Corporate Transparency Act 2023 (ECCTA) were published. As well as setting out the legal and policy background to ECCTA, the Explanatory Notes provide commentary on many of its provisions.
On 5 March 2024, the Pre-Emption Group published a report monitoring the use of its November 2022 Statement of Principles on the disapplication of pre-emption rights for UK listed companies (2022 Principles). In line with the recommendations set out in the UK Secondary Capital Raising Review, these increased the level of disapplication authority that companies can request routinely to 20%.
Key findings from the report covering annual general meetings (AGMs) from November 2022 to July 2023 include the following:
The report notes that the monitoring data shows that many companies continue to use elements of the 2015 Statement of Principles within their resolutions requesting disapplication authority. The Pre-Emption Group emphasises that the 2022 Statement of Principles now constitutes best-practice and companies should aim to align their requests accordingly, even if they do not seek the full amount of enhanced authority.
Companies are also reminded that under the 2022 Principles they should send a post-transaction report (which follows the template in Part 2B of the 2022 Principles) to the Pre-Emption Group on completion of a capital raising in which they have utilised disapplication authority. Over the next year, the Pre-Emption Group will implement a public database of post-transaction reports to make the information widely accessible.
(Pre-Emption Group, Annual Monitoring Report 2022-2023, 05.03.2024)
On 20 December 2023 the Financial Conduct Authority (FCA) published Consultation Paper CP23/31 setting out detailed proposals for the reform of the UK listing regime and appending tranche one of the new draft UK Listing Rules (UKLR) (see our briefing FCA proposals confirm radical reform of UK listing regime).
On 7 March 2024, the FCA published an updated draft instrument which contains tranche two of the new UKLR (alongside the original tranche one drafting). A summary of the key new material included in the updated draft instrument is included on the FCA's webpage in relation to CP23/31 and includes (amongst other things) the draft rules for the closed-ended funds, shell companies, secondary listing and GDR categories. The updated instrument supersedes the draft rules appended to CP23/31 and should be taken as the full and complete draft UKLRs for consultation purposes.
The FCA has also published proposed consequential changes to other FCA Handbook sourcebooks including the DTRs.
Although the closing date for CP23/31 remains at Friday 22 March 2024, consultation submissions in relation to the additional tranche two material (and the consequential changes instrument) will be accepted until Tuesday 2 April 2024.
The FCA notes that it is also in the process of reviewing and updating its Technical and Procedural Notes and expects to consult on these in two Primary Market Bulletins during April and June. It will also publish certain draft forms during that same period.
(FCA: Consultation webpage, 07.03.2024)
(FCA: Draft UK Listing Rules instrument 2024, 07.03.2024)
(FCA: Draft UK Listing Rules (consequential amendments) instrument 2024, 07.03.2024)
On 6 March 2024, HM Treasury (HMT) published a consultation setting out the Government’s proposal for a new innovative market that aims to allow private companies to scale and grow, and to boost the pipeline of future initial public offerings (IPOs) in the UK.
For more information, see our Regulation Tomorrow blog post here.
Publication
The Financial Crimes Enforcement Network (FinCEN) has announced that beneficial ownership information (BOI) reporting requirements are back in effect under the Corporate Transparency Act (CTA).
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