Policy background Companies House Reform
Companies House performs two vital roles which underpin the UK’s strong, transparent and open business environment. It facilitates the creation of companies and a range of other legal entities, which are vital building blocks of the modern economy. And it provides – free of charge and online – information about those entities, for the benefit of investors, providers of finance and other creditors, government agencies and the general public. Formally, powers are vested in the Registrar of Companies for England and Wales (and the Registrars for Scotland and for Northern Ireland: in legislation, references to "the Registrar" are taken to mean all three), who are supported in their work by the staff of Companies House, an executive agency of the Department for Business and Trade.
	In 2022-23, Companies House incorporated 800,000 companies and had a total of 4.6 million active companies registered. Companies House incorporation fees are among the lowest in the world and 99% of incorporation applications are processed within 24 hours. The total value of incorporation to owners of limited liability companies with 0 to 9 employees is estimated at £9.6 billion.
	Companies House has a strong track record for customer service and is well regarded worldwide. The legal framework in which it operates needs updating to meet the demands of a thriving and increasingly digitally-based 21st century economy. In addition to this, recent years have seen growing instances of misuse of companies, concerns over the accuracy of the registers that the Registrar maintains relating to companies and other registrable entities, and challenges to the safeguarding of personal data on the register.
	As set out in the Corporate Transparency and Register Reform White Paper, the Government would like to see Companies House have an expanded role so changes its statutory role from being a largely passive recipient of information to a much more active gatekeeper over company creation and custodian of more reliable data.
	The measures in Part 1 of the Act delivers these policy objectives, including by:
Expanding the role and powers of the Registrar:
This includes new objectives oriented to maintaining the integrity of the registers held at Companies House. These objectives are designed to guide the Registrar’s use of her powers with the ultimate goal of allowing the UK business environment to flourish. The Registrar is now equipped with enhanced powers to query suspicious appointments or filings and, in some cases, request further evidence or reject the filing, in pursuit of these objectives. These include measures to tackle the fraudulent use of company names and addresses. The Registrar is now better able to use fees to fund investigation and enforcement activity.
Introducing identity verification measures:
All new and existing registered company directors, People with Significant Control, and those delivering documents to the Registrar must have a verified identity with Companies House, or have registered and verified their identity via an anti-money laundering supervised authorised corporate service provider (ACSP). This will make anonymous filings harder and discourage those wishing to hide their company control through nominees or opaque corporate structures. It will make the data provided by Companies House considerably more reliable for business and general users.
Building on the above, the Act allows for the creation of a completely new type of sanctions measure under the Sanctions and Anti-Money Laundering Act 2018 called "director disqualification sanctions". An individual subject to this new sanctions measure will commit an offence if they act as a director of a company or directly or indirectly take part in or be concerned in the promotion, formation or management of a company. The Act also voids the appointment of directors who are disqualified, including as an undischarged bankrupt, or a person subject to the new director disqualification sanctions measure.
The Act also contains important new controls over who can set up companies and make filings on their behalf, ensuring such actors are verified and appropriately supervised under the Money Laundering Regulations.
The Act also improves the provision of information about company ownership.
Enhancing data sharing:
The Act provides the Registrar with more extensive legal gateways for data sharing with law enforcement, other government bodies and the private sector. This means more efficient sharing of suspicious activity with law enforcement and establishment of feedback loops with other government bodies, supervisory bodies, and the private sector. This will lead to quicker identification of discrepancies between information on the registers and information held by other bodies that can then be questioned through the Registrar’s enhanced powers to query information.
Preventing abuse of personal information on the register:
Individuals whose personal information has been displayed on the public register will be able to apply to have some more of that information "protected", so that it is not made available on the public register.
Individuals who can provide evidence that having their personal information on the public register puts them at serious risk of violence or intimidation will be able to apply to have it protected.
Companies who can provide evidence that having an address on the public register puts them at serious risk of violence or intimidation will be able to apply to have it protected.
Improving the financial information on the register:
The Act streamlines the range of accounts filing options for small companies into two regimes for small companies and micro-entities, simplifying filing options for business.
At the same time, the Act levels the playing field by requiring all businesses to file a profit and loss account as part of their annual accounts and removing the option for filing abridged accounts.
These reforms are intended to lead to better financial management practices within small and micro-entity companies, promote the transition to digital reporting, support better business and credit decisions, improve the value of the Companies House register to its users, and help wider efforts to combat economic crime.
	Companies House will undergo a full transformation, with the ambition of being the most innovative, open and trusted corporate registry in the world. The Government plans to enhance the contribution Companies House makes to the UK economy, and at the same time boost its capacity to combat economic crime.