The reporting and compliance requirements faced by all companies are set to become more extensive in the wake of the Government’s new plans to shake up the corporate governance framework, in order to better protect companies and ensure the accuracy of the Companies House register.
The government is targeting companies in its latest anti-crime initiative, with a new stated aim to “better protect businesses and ensure faster identification of possible criminal activity”.
Announcing the proposals, Business Minister Kelly Tolhurst said that the reforms will support the fight against the use of dirty money and enhance protections for entrepreneurs and directors from criminal activity.
Specific details will be announced following the conclusion of a widespread consultation, but the initial proposals include an extension of the powers of Companies House to independently query and corroborate information supplied to it before it is entered on the register. If implemented, this would mark a significant change to the registrar’s current practice to take all documents supplied in good faith. A further change will be to verify the identity of those holding key roles within registered companies.
It is fair to say that once introduced these changes will help protect companies from fraud as well as safeguard the personal information of those individuals associated with them. It follows almost 10,000 complaints received in the last three years of corporate data misuse including fraudulent activity.
Although these measures will help to improve the accuracy and reliability of the company register, it clearly places more of a burden on the administrative systems employed by Companies House. To this end, it has been announced that the changes will be supported by a major transformation programme to upgrade the digital services offered by Companies House, alongside a review of staffing and skills requirement. However, the initial announcement falls short of offering any budgetary increase which will almost certainly be needed to implement the additional checking requirements for corporate documentation.
There are now even more potential pitfalls for business owners to avoid when it comes to corporate governance.
Our company commercial solicitors regularly assist business owners to ensure that their companies follow good corporate governance and the Companies Act 2006. We are able to safeguard your business by ensuring that all of these new requirements are met, including leadership, accountability and transparency.This article was written by Edward Garston, Partner in the Company & Commercial Team at Pinney Talfourd LLP Solicitors. The contents of this article are for the purposes of general awareness only. They do not purport to constitute legal or professional advice. Specific legal advice should be taken on each individual matter. This article is based on the law as of May 2019.