Local companies of all shapes and sizes will face new responsibilities under the new Economic Crime & Corporate Transparency Act 2023 which passed into law at the tail end of last year.

The Act, with wide ranging powers to enable the prosecution of companies for a range of fraudulent activities and economic crimes, might appear not to impact on many law-abiding organisations but it will deliver new responsibilities for all of us.

That’s the warning from James Boyd, a key member of the corporate and commercial team at Belfast city centre law firm MKB Law.

“Where a lot of local businesses will see the effects of the new legislation is in their dealings with Companies House. In fact, the Chief Executive of Companies House, Louise Smyth, has described the legislation as the most significant set of changes ever to impact on the agency,” says James.

“It’s all part of a crackdown on criminal and fraudulent activity in the corporate world, a lot of it driven by criminals from well outside of this jurisdiction. But, as a result, the legislation and its measures amount to a major spring clean for Companies House.

“Take a look through the Companies House data and you’ll have found any number of clearly fictional names being used as directors, as well as PO Box addresses given for companies. There were clearly major issues and the system was definitely being abused.

“The new legislation sets out to clean up the database and to punish those who have been abusing the system through a suite of powers to investigate, query and reject information provided to Companies House.”

Amongst the forthcoming changes, which will impact on every company that files its details with Companies House, are the introduction of identity verification checks for directors, persons with significant control, authorised signatories and individuals filing documents at Companies House.

“It’s one straightforward means of stopping users from making a mockery of the register, as well as preventing it from being a playground for fraudulent activity,” adds James Boyd. “At the same time, it is no longer permissible for companies to hide behind PO Box addresses. Under the new legislation, an “appropriate” registered office address must be provided to Companies House as well as an email address, not for publication but for contact purposes.”

In addition, companies are to be asked to make a declaration of lawful purpose… an official pledge, if you like, to act within the law.

“Existing local companies will find that they will need to provide this information the next time that they file their confirmation statement to Companies House. Those setting up new companies will be required to provide more information during the incorporation process.”

The new legislation also creates new powers for the authorities to continue to counter money laundering, including the ability to seize, freeze and recover crypto assets.

“Companies House has also been given the power to share company data with all other government departments as well as crime agencies,” James adds.

“There’s an old hymn with the line ‘Thy dross to consume, and thy gold to refine’ and it’s fairly appropriate in this case, I reckon.

“In a lot of ways, this new legislation is all about getting rid of the dross – and there is plenty of it – and refining what the companies’ database is all about.

“So, for most companies here in Northern Ireland, this should be a simple process. But, like anything else, if anyone has any concerns, seek advice from your accountant or solicitor earlier rather than later.”

The new Economic Crime & Corporate Transparency Act is described as the biggest set of changes and modernisations to affect Companies House in its 180-year history.

“It brings how the UK handles company information right up to date,” says James Boyd. “And that’s something that was badly needed.”