Part 1: Companies House Reform Identity verification Section 64: Identity verification of persons with significant control
This section inserts sections 790LI, 790LJ, 790LK, 790LL, 790LM, 790LN, 790LO and 790LP into the Companies Act 2006. Sections 790LI to 790LP introduce the identity verification requirements for persons and legal entities with significant control in companies defined under section 790C and registrable under Part 21A of the Companies Act 2006. A Person with Significant Control (PSC) is an individual who meets at least one of the specified conditions in Schedule 1A of the Companies Act 2006. A company must take reasonable steps to identify its PSCs and provide information on its PSCs to the Registrar. Where a company is owned or controlled by a legal entity which meets at least one of the specified conditions in Schedule 1A of Companies Act 2006, it can be a registrable relevant legal entity (RLE) in relation to the company. It is a RLE if it is subject to UK PSC requirements, or has voting shares admitted to trading on a regulated market in the UK or EEA, or on specified markets in Switzerland, the USA, Japan or Israel. The RLE is registrable in relation to a company if it is the first RLE in the company’s ownership chain. This section therefore refers to registrable persons and registrable relevant legal entities as defined by section 790C.
	As only individuals can verify their identity, a RLE must provide information on its relevant officer as defined by section 790LK(6) whose identity is verified. The purpose of the identity verification of a relevant officer is to ensure that a verified individual is always traceable for each RLE. RLEs must therefore ensure that a verified relevant officer is notified to the Registrar and this information is updated when there are changes to the relevant officer. This section also uses the term ‘registered officer’ as defined by section 790LN(2) to specify the circumstances in which the duty of relevant persons to file a verification statement applies.
	Sections 790LI to 790LP create duties, powers and offences to ensure, that (i) each PSC verifies their identity and maintains their verified status as long as they are registered with the Registrar and (ii) each RLE must verify the identity of their relevant officer and maintain the verified status of their registered officer as long as this RLE is registered with the Registrar. The duties in relation to identity verification of registrable persons (individual PSCs) are established under sections 790LI-LJ and 790LM and they do not apply to persons listed in section 790C(12)(a) to (d).
	Sections 790LJ and 790LL set out the transitional arrangements and apply identity verification duties to PSCs and RLEs that became registrable prior to sections 12B(2)-(4) and 790LB(1)-(3) coming into force.
PSCs must within 14 days of the appointed day to deliver to the Registrar a statement that their identity is verified. PSCs must maintain their verified status from the expiry of this 14-day period as long as they are registered with the Registrar. The Secretary of State may, by regulations, set out the appointed day.
RLEs must deliver to the Registrar within 28 days of an appointed day a statement specifying the name of its verified relevant officer, together with a statement by that individual confirming that they are a relevant officer of the entity. RLEs must maintain a verified relevant officer from the expiry of this 28-day period as long as this RLE is registered with the Registrar. The Secretary of State may, by regulations, set out the appointed day.
	Under section 12A subscribers must deliver a statement of initial significant control to the Registrar. This statement may be accompanied by a statement which identifies a registrable person or a relevant officer on behalf of a RLE who has verified their identity. This subscribers’ statement on identity verification is however voluntary, and if it is not provided, the Registrar will issue a direction under section 790LI or 790LK.
	Section 790LI gives the Registrar a power to direct a PSC to deliver to the Registrar a statement confirming that the PSC’s identity is verified. To comply with this direction and properly deliver this statement, the PSC must verify their identity beforehand. The Registrar will make such direction in two cases. First is where a person becomes a PSC on incorporation of a company, but the subscribers did not confirm under section 12B(2) that this PSC’s identity is verified. The second is where a person becomes a PSC after incorporation of a company, but the company did not confirm under section 790LB(1) that identity of this PSC was verified. The Registrar will also make a direction if in both cases the subscribers’ or company’s statements were false.
	The Registrar will not make a direction and any direction made will lapse, if the Registrar receives a notification under section 790LD(1). Such notification must confirm that although a person was named in an application to form a company as a future PSC, they did not so become. A company should file such notification for example, when a future PSC died before the Registrar issued a certificate of incorporation. Registrable persons have 14 days in which to provide the verification statement when directed to do so by the Registrar.
	Section 790LM creates a duty on the registrable person to maintain their verified status as long as they are registered with the Registrar. The relevant period for compliance is defined under section 790LM(2). When this compliance period starts depends on when the statement confirming that the PSC has verified their identity was delivered, or should have been delivered with the Registrar. If this PSC ceased to be verified under regulations made under section 1110A(3), they should reverify their identity. If they fail to do so they will be exposed to criminal liability under section 790LP. New duties and powers in relation to identity verification of registrable RLEs are established under sections 790LK, 790LN and 790LO.
	Section 790LK gives the Registrar a power to direct an RLE to deliver to the Registrar certain statements. For the RLE to comply with this direction and properly deliver all the statements, an RLE’s relevant officer must verify their identity beforehand. The purpose of this provision is to verify the identity of individuals managing RLEs and through that ensure the transparency of who is controlling companies.
	A person can only be a relevant officer of an RLE, if they are an individual (section 790LK(2)(i)) and they fall under the definition in section 790LK(6). Only persons who are directors, members, or in a role equivalent to a director should be notified and verified as relevant officers of an RLE. A relevant officer cannot be a body corporate.
	The RLE must deliver a statement made by itself (referred to as "this entity"), confirming the name of its relevant officer and confirming that this relevant officer’s identity is verified according to section 1110A. Additionally, the RLE must deliver a statement on behalf of the relevant officer confirming that their relationship with RLE makes them the RLE’s relevant officer.
	The two cases in which the Registrar will make such direction are similar to those under section 790LI. First is where an entity becomes an RLE on incorporation of a company, but the subscribers did not make statements under section 12B(3). The second is where an entity becomes an RLE after incorporation of a company, but the company did not make statements under section 790LB (2) or (3). The Registrar will also make a direction if in both cases the subscribers’ or company’s statements were false.
	The Registrar will not make a direction and any direction made will lapse, if the Registrar received a notification under section 790LD(1). Such notification must confirm that although an entity was named in an application to form a company as a future RLE, it did not so become. A company should file such a notification for example, when a future RLE was dissolved before the Registrar issued a certificate of incorporation.
	Section 790LN obliges the RLE to ensure that the individual notified to the Registrar of Companies as the relevant officer of an RLE meets the criteria of a relevant officer and has their identity verified with the Registrar as long as the RLE is registered with the Registrar. The purpose of this section is twofold. First, to ensure, that whoever is notified by the RLE as a relevant officer meets the criteria under section 790LK(6). It means that this individual must be in a senior managing position, like a director, a member or other officer with functions like a director of a company. If an individual notified to the Registrar as a relevant officer dies or resigns from being a director of the RLE, they will not meet the criteria under section 790LK(6) anymore. To avoid a breach of section 790LN, the RLE should notify the Registrar about its new director (relevant officer) under section 790LO. The second purpose is to ensure that the registered relevant officer always has their identity verified with the Registrar of Companies. As a consequence, if this person ceases to be verified under regulations made under section 1110A(3), they should reverify their identity. If they fail to do so they may be exposed to criminal liability under section 790LP.
	In general terms, as long as an entity is notified to the Registrar as an RLE of a company, it must have a verified, relevant officer registered. The relevant period for compliance with the duty under section 790LN is defined in subsection (3). When this compliance period starts depends on when statements about the relevant officer were filed, or should have been filed with the Registrar. Section 790LN(4) provides for a 28 days grace period after a registered officer ceased to be a relevant officer. During this compliance period the RLE should notify the Registrar about any new relevant officer under section 790LO to avoid breaching section 790LN.
	Section 790LO allows an RLE to change its registered officer by giving notice to the Registrar. An RLE will file such notice, for example, when the individual notified to the Registrar as a relevant officer dies, stops meeting the relevant officer criteria (for example resigned from the position of a director, or their appointment was terminated), or the RLE merely decides to notify another person as a relevant officer. When notifying the change of registered relevant officer, the RLE must make equivalent statements as under section 790LK(2).
	Section 790LP creates offences for failure, without reasonable excuse, to comply with duties under sections 790LI to 790LN. If the offence is committed by a RLE, its officers in default also commit an offence.