New identity verification rules for UK registered companies

By Samantha Bowley

Solicitor

24 July 2024

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The Economic Crime and Corporate Transparency Act 2023 (ECCTA) has amended the Companies Act 2006 (2006 Act), introducing requirements for certain individuals to verify their identity. Companies House has announced that the requirements are not yet in effect as some aspects of the ECCTA require the creation of secondary legislation and guidance. Companies House has indicated an intention for these measures to come into force from early 2025.

The requirements, once in force, will apply to individuals who are directors and persons with significant control (PSC) of companies incorporated in the UK. The requirements will apply to new and existing UK companies but there will be a transitional period, which will provide time for existing UK companies to comply with the new requirements.

The identity verification requirements are intended to improve the reliability of the information on the register at Companies House, as well as to make it challenging for individuals to create a fictitious identity, or fraudulently use another person’s identity, to set up or run a company.

There will be two routes to identity verification, with individuals having the option to verify their identity directly through Companies House or indirectly through an authorised corporate service provider (ACSP), such as an accountant, legal adviser or company formation agent. Companies House are currently in the process of developing an effective identity verification system, which will be active when the identity verification requirements come into effect.

A draft statutory instrument, the Registrar (Identity Verification and Authorised Corporate Service Providers) Regulations (Regulations), makes provisions under the 2006 Act for identity verification, setting out the procedure that must be followed for an individual to have their identity verified by either Companies House or an ACSP.

According to the Regulations, in some cases, an individual will only be required to provide one piece of documentation to verify their identity. This will typically be where the document contains biometric information, such as a passport or an identity card. In other cases, two pieces of documentation will be required – one form of photographic identification, together with a form of supporting documentation.

The consequences of non-compliance with the identity verification requirements will depend on the circumstances. However, an individual who is required to verify their identity, and fails to comply, could be subject to, amongst other things, criminal proceedings, civil penalties, incorporations and statutory filings being rejected by Companies House or the public register being annotated to show the individual’s status as unverified. Exact details of sanctions and penalties for non-compliance will be set out in secondary legislation.

If you would like to discuss any of the points mentioned above, our Corporate & Commercial team would be happy to help. Please visit the contact page to speak with us.

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