The government has outlined new powers to be wielded by Companies House, as it promises to “take forward” a set of proposals for the UK company registrar to tackle financial crime and fraud.
The UK company registrar will be able to challenge submitted information with a new querying power and to remove information where insufficient evidence of its validity is provided.
In a white paper published yesterday (February 28), the Department for Business, Energy & Industrial Strategy said it recognised Companies House currently had “very limited powers” to remove material from its register.
The white paper was published in conjunction with the publication of the Economic Crimes Bill, which was brought forward before parliament today (March 1) to "clamp down on dirty money" following the invasion of Ukraine by Russia.
Changes to the powers of Companies House also form part of a government-led programme to “transform” the register, first announced back in September 2020. The programme has been hailed by the government as “the most fundamental change” to the register’s role and purpose since its creation in 1844.
So far, BEIS has invested £20mn in the transformation programme, with a further £63mn pledged up to 2024-25 in its latest Spending Review.
Yesterday BEIS said: “We will take forward our proposal that the registrar should have a discretionary power to remove material which impacts upon the integrity of the register.
“We propose that the registrar should be able to remove information following the use of her new querying power.”
This new querying power will allow Companies House to pull into question information submitted pre- and post-company registration. Only if companies provide sufficient evidence that the information they submitted is correct can the information remain.
Examples where Companies House could use this new querying power, according to BEIS, include when a registered name may be part of a campaign to target an entity or individual with whom the applicant has no connection, where the name of an international organisation or institution is being used (such as a bank) without permission, or where there is intelligence of fraud or other criminal activity.
“Should the entity fail to respond to a query, or fail to provide sufficient evidence in its response even after being asked for more, the registrar will be able to take a number of actions, including if appropriate imposing a sanction upon the entity,” BEIS said.
The government department is yet to reveal what those sanctions may be, but said sanctions suggested in its December 2020 consultation will be considered. These included fines, as well as criminal sanctions or director disqualifications.
“We consider that a range of sanctions will help to incentivise compliance, as well as ensure that the registrar has the appropriate flexibility to assist her in maintaining the integrity of the register,” the government department said.
In terms of the evidence Companies House will accept if information is queuried, BEIS said it would be “impractical” to set out a definitive list of acceptable evidence - meaning a whole range can be submitted.
Companies House will, as part of its new powers, be able to change the address of a company's registered office where it is satisfied a company is not authorised to use the address. Currently, the registrar’s power to change a registered office address can only be used on application.
BEIS is also introducing a new verification process for company directors, this will reconcile their identity documents with their face through a digital application - much like setting up a bank account with the likes of Starling or Monzo.
Directors who do not comply will be committing an offence and may also be liable for a civil penalty, according to the government.
It added that a transition period will provide existing companies and other registrable entities a set amount of time to comply with the new requirements. These timelines are yet to be outlined.
ruby.hinchliffe@ft.com
