The Economic Crime and Corporate Transparency Act, which came into effect on the 4th of March 2024, has brought a significant shift in the UK’s approach to corporate governance.
This legislation enhances Companies House’s powers and introduces stringent requirements for businesses, aiming to increase transparency and combat economic crime. Here’s a breakdown of the key legal implications and the steps companies need to take to comply.
New Compliance Requirements
Under the new legislation, Companies House has the authority to check and verify information provided by companies more thoroughly. This means that businesses will not only have to submit their standard registration details but also provide proof that these details are accurate and that their business activities are lawful.
This is a shift from the previous system where Companies House acted primarily as a repository of corporate information without extensive powers to verify it.
Increased Transparency Requirements
- Enhanced Register of Overseas Entities
- Public Register of Beneficial Owners
- Tighter Control Over Company Formations
- Increased Reporting Duties
- Directors are under greater scrutiny
The Immediate Impact
With a primary focus on increased transparency requirements for businesses in the UK, immediate hurdles that every business must consider are:
- The ECCTA mandate for compulsory identity verification for directors and persons with significant control (PSCs).
- The increased information sharing obligations between companies – to prevent and detect economic crimes.
The Importance of Legal Advice
Given these new complexities and the severe penalties for non-compliance, including potential fines and legal actions, legal advice becomes more crucial than ever.
Legal experts specializing in corporate law can help businesses understand the new laws, assess their current compliance status, and make the necessary adjustments. Further with the advice of legal professionals, businesses can adjust their internal process to ensure ongoing compliance without avoidable mishaps.
The Economic Crime and Corporate Transparency Act is more than just a regulatory update; it is a call to action for businesses to ensure they operate transparently and lawfully.
