January 26, 2021 Corporate Transparency and Register Reform – Powers of the Registrar
The Department for Business, Energy & Industrial Strategy has published three follow up consultations to the response to the Corporate Transparency and Register Reform Consultation.
During January, Elemental will provide an overview of each of the three consultations which all close on 3 February 2021.
This third article reviews the consultation on the Powers of the Registrar. The government is proposing the introduction of a discretionary power to query and check information before it is placed on the register along with changes to the Registrar’s existing powers.
The Registrar’s power to query information
Companies House currently does not verify the accuracy of information submitted to it. Information is accepted purely based on its valid submission.
The government propose that this be changed so that the Registrar can deal with identified errors and anomalies.
The power is to be applied using a risk-based approach. Companies House will not actively monitor the register to act on every error. This would be logistically difficult in any event. Rather, the querying power will be used where an identified error appears fraudulent, suspicious or might impact significantly on the integrity of the register and the UK’s business environment.
Most filings will be unaffected but there will be an important shift in principle.
Reforming the Registrar’s existing powers
The Registrar has limited administrative powers to rectify and remove information from the register. Companies House receives regular complaints that the powers do not apply to all types of roles, that the period taken to remove information is too long and that abuses of certain processes take place.
The government proposes to extend the categories of information that can be removed by the Registrar and provide more flexibility in some situations.
Other reforms include allowing Companies House itself to decide when to require documentation to be submitted electronically. Currently this power lies with the Secretary of State.
Rules governing Company Registers
The government is proposing that the requirement for companies to keep a Register of Directors is removed. This would move the point of legal effect of a director’s appointment to when their identity has been verified and added to the public register making the filing a legal effect filing like that of the registered office of a company.
The important impact of this reform is that the record of a company’s directors on the register will become the definitive record of appointment as a director. At the moment, an individual is appointed as a director at the moment of appointment by the Company. The filing with Companies House is currently only a notification of an event that has already happened.
The aim is to reduce burdens on business as there will no longer be a requirement for each company to maintain its own Register of Directors. This also removes the change of discrepancies emerging and should, therefore, improve the integrity of the public register.
The consultation also confirmed that a similar proposal in respect of a company’s Register of Members (Shareholders) will not be taken forward.
How Elemental Can Help
The consultation is open until 3 February 2021. You can respond to it here. The government expects to respond confirming its plans in 2021.