UK company directors to be required to prove identity before taking office
The compulsory verification procedure will also apply to a company's persons with significant control (PSCs) and to those filing information on its behalf.
Companies House already maintains a public register of beneficial ownership as well as basic information about companies and their officers. The basic companies register records around 4.2 million limited companies, and was accessed 9.4 billion times in 2019. However, there have been concerns that the information provided by company officials for these registers is not always reliable and is of limited use for deterring the abuse of corporate entities. Companies House is therefore also to be given new powers to investigate false information by comparing it with corporate data held by other public and private sector bodies, and remove it from its register if proven false. Moreover, it will require evidence of checks carried out by regulated professional service providers submitting information on behalf of clients.
The announcement from the government's Department for Business, Energy and Industrial Strategy (BEIS) follows up on earlier statements of intent to prevent nominee companies committing fraud and money laundering. A consultation on the proposals in 2019 attracted 1,320 responses, which, according to BEIS, broadly supported the government's plans.
Concerns that identity verification would increase bureaucracy and slow down the creation of new companies are being addressed by 'a fast, efficient, 24/7 digital verification process that is expected to take a matter of minutes.'
The new measures will generally apply to private and public limited companies, unlimited companies, unregistered companies and overseas companies, as well as limited liability partnerships and limited partnerships. Some of the changes will also apply to entities captured under the draft Registration of Overseas Entities Bill.
Some of the extra information will be restricted from public gaze, however. Directors will retain the right to conceal their personal residential addresses, although this information will still be available to public authorities and law enforcement agencies.
'Plainly it makes sense to reinforce Companies House as part of a wider response to economic crime', commented Alun Milford, Partner at law firm Kingsley Napley. 'Companies House will clearly also need greater resources if it is to implement these important changes effectively.'
A timescale for implementing the reforms has not been set.
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