Measures in the Economic Crime and Corporate Transparency Act come into force
Partner Giao Pacey comments on the first set of measures in the Economic Crime and Corporate Transparency Act which came into force today.
Following the enactment of the Economic Crime and Corporate Transparency Act 2023 on 26 October 2023, Companies House has implemented its first set of measures on Monday 4 March 2024, which include:
- "The ability for Companies House to annotate the register when information appears confusing or misleading, and to take steps to identify and remove inaccurate information from the register. It is currently unclear to what extent a company will be consulted on what information should be changed and how Companies House will identify what information is inaccurate. The Government guidance on the changes indicates that latest developments in digital technology will be employed which, with the advancement of generative AI, may create a whole host of issues when cross-checking data.
- "A requirement for confirmation that a company is being formed for a lawful purpose when being incorporated, and to confirm that its intended future activities will be lawful on its confirmation statement. This requirement seems an odd addition since you would think that any person who wished to form a company for an unlawful purpose would be unlikely to say so. This obligation has probably been included to place the onus on third parties involved in or assisting with the incorporation of a company (for example, nominee shareholders or lawyers) to carry out enhanced checks on the company’s true activities. The measure won’t catch out everyone but may go some way to making it more difficult for companies to be set up for illicit purposes.
"The Act aims to enhance corporate transparency and tackle financial crime which, if successful, will be welcomed. These measures, along with others to be introduced from the Act overtime, are likely however to create heavy administrative challenges for the many small- to medium-sized companies already registered or seeking to be registered, and only time will tell how effectively and proportionately Companies House will use its newly obtained powers."
Giao's comments were published in City A.M., 4 March 2024.
If you want to read more about the wider consequences of the ECCTA, which are due to come into force during 2024, we have prepared a series of articles on the topic, available here.
