Growing transparency requirements for schools, colleges and universities in the UK

In autumn last year, the Economic Crime and Corporate Transparency Act 2023 (ECCTA) gained Royal Assent and became law. Though many provisions of the ECCTA are not yet in effect (as the Act is subject to a phased implementation), over time it is intended to prevent abuse of UK corporate structures, including through enhanced investigative and enforcement powers for Companies House and law enforcement, as well as a new identity verification process.

This regime will apply to all UK companies, including those operating schools, colleges and universities and their group entities.  It will be essential for the company secretarial function to be up to speed with the new requirements.

Verification of directors and persons with significant control (PSCs)

ECCTA will, in time, bring in an identity verification process for all new and existing directors, PSCs and those who file on behalf of companies. The process is intended to ensure that anyone falling into these categories is in fact who they claim to be.

What this will mean in practice remains to be seen – we await guidance from Companies House and secondary legislation – but the process is expected to require digital submission of photographic and other evidence to Companies House. The relevant individual will then be assigned a unique identifier number to be referenced in all future filings. An alternative to direct verification via Companies House will be indirect verification through an authorised corporate service provider (ACSP), such as a law firm - or indeed our own company secretarial team - who will be able to declare to Companies House that the necessary checks have been carried out. 

This is not something that can safely be ignored, as directors who have not been verified but carry out company business in that capacity will be committing an offence. Repeated non-compliance could also lead to director disqualification among other consequences. 

It may be comforting that the launch of these requirements will be part of the longer-term implementation of the ECCTA (with the timeframe to be confirmed), though some of the simpler requirements of the ECCTA will be coming in during the spring.

Companies House as regulator

Companies House will receive extensive new powers aimed at ensuring the accuracy of the information it receives. For example, where submissions contain information inconsistent with that on the register, Companies House will be able to reject the filing or require additional information.  

Companies House will also be able to change a company's name if it fails to change its name despite prompts and it will similarly have the power to change a company's registered office in certain circumstances.  In addition, going forward, all company registered office addresses must be "appropriate" (for example, not a P.O. Box) and they will also need a registered email address.

These changes are part of a transition for Companies House into much more of an active regulator than mere record-keeper.

Extended powers of involuntary strike off

Under the current Companies Act 2006, Companies House has the power to strike off a company from the register where there is reasonable cause to believe the company is not carrying on business or in operation. The ECCTA will expand this, providing an additional strike off power where there is reasonable cause to believe that any information contained in, or statement connected to, the company's application for registration or restoration is false. 

Higher fees 

So how is Companies House going to fund its new role and powers? Incorporation and annual fees payable by UK companies are expected to increase very soon. To what degree fees are expected to rise is not yet clear, but this is certainly on the way, and Companies House has indicated that in its view, it is currently very affordable as compared to its peers.  

What should you do?

These are just some of the changes being brought in by the ECCTA, which some consider to be the most significant change to UK company law since the Companies Act 2006.  The Companies House blog is a useful site to monitor to ensure you are up to speed, and we will of course be very pleased to assist as needed.