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Over the course of this year and next, Companies House will be introducing some significant changes, particularly around the identification requirements for directors and persons of significant control (“PSCs”). The reason behind these changes is to improve the reliability and transparency of the information held at Companies House, as well as to help combat white-collar crime.

These changes stem from the Economic Crime and Corporate Transparency Act 2023, and are part of a broader crackdown on company misuse, with 11,500 companies recently struck off the register for being used as shell companies in organised crime. Companies House is taking a more aggressive stance to ensure only legitimate businesses are in operation. This highlights the importance of complying with the new identity verification rules, as failure to do so could lead to similar actions and disrupt operations.

What Changes Are Coming?

• Identity Verification for New Directors and PSCs. By the end of 2025, all newly appointed directors and PSCs will need to complete an identity verification process with Companies House. This means providing valid identification, either directly to Companies House or through an authorised corporate service provider, such as a registered firm of solicitors or accountants.
• Verification for Existing Directors and PSCs. For the over 7 million existing directors and PSCs, Companies House will start a 12 month process to verify their identities. This may be done by businesses directly with Companies House or by a company’s authorised corporate services provider alongside the filing of the company’s annual confirmation statement, and we may expect a new section to be added, similar to the recent need for companies incorporated before March 2024 to provide a registered email address.

Consequences for Non-Compliance

Once the 12 month verification period has passed, directors and PSCs who have not verified their identities could likely face ‘compliance activity’. While the specifics of this compliance activity are still unclear, it is expected to include fines and, depending on the approach Companies House takes, the possibility of removal from the register and barring of that person from being registered as a director or PSC at Companies House. This could create significant roadblocks for companies if they do not meet the new requirements.

How to Prepare

Companies should begin preparing now to meet these new identity verification requirements. Whether businesses choose to manage the process internally or seek assistance from an authorised corporate service provider, it is important to get ahead of the game. These providers can assist in making sure everything is submitted correctly and on time.

If you need assistance navigating the new requirements, our specialist Corporate Lawyers at Leathes Prior Solicitors would be pleased to assist you with this. You can contact us by email at info@leathesprior.co.uk, or by telephone on 01603 610911.