Companies House has been given teeth — and firms must adapt swiftly

An era of corporate governance has landed with the Economic Crime and Corporate Transparency Act 2023, which introduces wide-ranging reforms that have and will continue to affect how businesses, their officers and advisers manage the subject.
Last year’s legislation sets out an agenda to combat financial crime, improve the accuracy of company data and increase the accountability of individuals involved in corporate activities.
Now enter Companies House, the register of businesses in the UK. In previous years, it has been a passive, administrative operation. A scandal this year, which involved 800 apparently incorrect filings made to Companies House by one account, claiming charges for more than 190 companies had been satisfied, illustrates that point. As does the fact that — according to a report from the think tank Tax Policy Associates — out of 4,430 active public limited companies, 132 failed to file annual accounts on time by August 1 this year.
Companies House now appears to be morphing into an active apparatus of accountability, scrutiny and enforcement.
Under the 2023 law, an identity verification scheme will be introduced for all directors, persons with significant control of a company, and those acting on behalf of companies to reduce an individual’s ability to hide behind a false identity or corporate structure.
The requirement on companies to maintain individual registers of directors, persons with significant control and secretaries will be removed. Instead, this information will be made available on a centralised register, to be continually updated by companies, within 14 days of any change. This emphasises the onus placed on individuals to ensure the accuracy of information available at Companies House.
The legislation has equipped Companies House with increased powers to investigate and scrutinise. It is now able to reject documents containing incorrect or fraudulent information. Stringent timelines have been introduced for filing requirements. Failure to comply carries with it financial penalties of up to £10,000.
Individuals found to have made fraudulent filings or obstructed investigations can face prison sentences of up to two years.
Companies House has also indicated that it will be co-operating with the Serious Fraud Office, the Insolvency Service and other enforcement agencies to share information. Reliable and accurate information from Companies House makes offences — such as the new failure to prevent fraud offence — easier to pursue. Coupled with the fact that Companies House has published its enforcement policy on how exactly it will implement its powers, this demonstrates the rigour with which its newly established powers will be applied.
The message is clear. Companies House has departed from its former position as a passive registrar of company information. It will be the responsibility of businesses to adapt swiftly and ensure that robust compliance frameworks are put in place. Hamish Perry is a partner at London law firm Charles Russell Speechlys