October 2, 2020 Companies House Reform: Improving the Accuracy and Usability of Data
Companies House currently accepts what it is told in good faith. This may come as a surprise, but Companies House has no verification role and presumes the truth of all information submitted to it. In the fall out from the recent FinCEN files leak, it has dawned on the government that this is not a sustainable position. Long overdue reform proposals have now been published.
Corporate transparency and register reform: Government Response
In the second of a series of articles examining the recently published government response to the consultation on enhancing the role of Companies House and transparency of UK corporate entities, we review the proposed reforms to the powers of Companies House to verify data submitted to it.
4% of filings made to Companies House are rejected every year but this does not tell the whole story. Such filings are rejected for basic reasons such as a missing signature or an incomplete form. Many more filings are accepted with incomplete information.
Companies House freely accepts that it does “…not have the statutory power or capability to verify the accuracy of the information that companies send…”. Since its inception, it has accepted information submitted in good faith.
The government, under pressure following the recent leak of US Suspicious Activity Reports (know as SARs) as part of the FinCEN files, has been roused to act. The powers of Companies House are to be reformed including the introduction of a statutory discretion to query and check information before it is placed on the register.
What these powers will look like and the circumstances in which they may be triggered remains unclear and will be subject to further consultation, but it can only be a positive development that this issue is being addressed.
Related reforms will extend the Registrar’s current limited powers to amend information already on the register. It will be easier to remove or amend inaccurate information on the register and, where the validity of information has been called into question, the onus will be on the company to evidence any objection to an amendment.
Ease of doing business
The challenge faced, as with any major reform of Companies House, is to improve the accuracy of data without compromising the ease of doing business in the UK. Any reform must seek to be proportionate and not unduly delay the registration of company information.
Further consultation is planned by the government. This is no bad thing as the balance to be struck is a delicate one, but heels cannot be dragged forever if the accuracy and veracity of information contained on the register of companies is to be improved.
How Elemental can help
We believe that company secretarial and compliance matters. These reforms show how important they are and how much is likely to be changing over the next few years. For more information on our company secretarial services or to speak to one of our experts, please get in touch.