Companies House has published draft rules designed to reduce the risk of fraudulent companies and rogue directors operating within the UK by ensuring stricter identity verification processes for new company registrations.
Tougher requirements for company registration
The new rules, outlined in the Registrar (Identity Verification and Authorised Corporate Service Providers) Regulations 2024, mandate that anyone seeking to register a company must meet more stringent ID verification standards. These measures follow an increase in company registration fees earlier this year and are part of broader efforts to enhance the accuracy of public information and curb economic crime.
Prospective business owners will need to provide a valid email address, current residential address, and proof of identity using a current photo ID. Acceptable forms of ID include documents listed on the Public Register of Authentic Identity and Travel Documents (PRADO), such as a driving license or national identity card from the director’s home country. If these are unavailable, alternative documents like a birth certificate, immigration document, marriage certificate, or bank statement can be used.
Compliance and penalties
Failure to comply with these new requirements will result in fines, though the exact penalty system is yet to be confirmed. The draft legislation specifies that non-compliance with Regulation 5 of the Registrar Regulations 2024 will attract penalties​​.
Additionally, different rules apply if the identity verification is conducted through an Authorised Corporate Service Provider (ACSP). In such cases, applicants must provide one form of biometric ID from the first list above or two forms of evidence from the second list. A photo ID and a supporting document will suffice​​.
Enhancing trust and transparency
The introduction of these rules responds to concerns about the misuse of corporate structures for illicit activities. By requiring directors to verify their identities before being appointed, Companies House aims to ensure that the data on the company register is accurate and reliable. This will deter fraud and provide businesses with greater confidence in their transactions​​.
These changes are part of the broader Economic Crime and Corporate Transparency Act 2023, which seeks to give Companies House greater powers to query, investigate, and remove false information from the register. The act also introduces new filing requirements and restrictions on corporate directors to further enhance transparency​.
Practical steps for business owners
Companies House advises businesses to prepare for these changes by familiarising themselves with the new requirements and planning for compliance once the secondary legislation is enacted. This includes setting up appropriate registered offices and email addresses that can accept and acknowledge delivery of documents, as PO boxes will not be permitted​​.
While adding an extra layer of scrutiny, the reforms aim to maintain the speed and efficiency of company formation processes. Most companies will still be able to be incorporated within 24 hours through a streamlined, digital verification system​​.
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