What is it?
The Economic Crime and Corporate Transparency Bill, which is currently before Parliament, introduces reforms that will have consequences for Directors of UK companies.
One of the most fundamental changes that are being introduced is the concept of ID Verification.
Who is it for?
All new and existing directors of UK-registered companies.
How does it work?
Once the legislation has been enacted into law, all new and existing directors of UK companies will be required to verify their ID with Companies House. The information used to verify a director’s ID will be protected information, and thus it will not be displayed on the public record.
The requirements for verification will differ depending on whether you are an existing director or one appointed after the law is changed, during or after the company is incorporated.
Existing Directors: It is expected that there will be a specified timescale for when existing directors ID verification must be completed, once the law is passed. As yet, there is very little information on what this timescale is likely to be.
It is anticipated that there will be a new portal through which Directors must register an account and submit a copy of their ID alongside taking a photo of themselves. The portal will then use face-mapping software to verify the individual the photo is the same as the individual on the ID document and will verify them across all their appointments on the Companies House Register. This verification will only need to be done once per individual rather than multiple times for each company they are a director of. If you are a director and a PSC, your verification will also apply to that PSC appointment, and you will not need to re-verify as a PSC.
New Directors: for new directors that are appointed after the incorporation of a company, the requirement to verify ID will be before they are appointed.
The new director must confirm to the company that they have verified their ID with Companies House, after which they can be appointed. If Companies House receive a notification of an appointment and the individual has not verified their ID, that appointment will not be added to the register. Crucially, it will be deemed an offence for that individual to act as a director if they have not verified their ID with Companies House, and for the company to allow them to act as a director, and civil penalties may be applied. Companies must therefore take steps to ensure they have evidence of verification before formally appointing a new director.
If you are a director appointed during incorporation, you will also need to verify your ID before the appointment; you will be required to provide evidence of this during the incorporation. Unfortunately, there is little information about what will constitute evidence, and we will update our briefing when we have further details.
Both current and new directors may prefer to ask a third party to arrange this ID verification. An “Authorised Corporate Service Provider”, such as an Accountant or Solicitor, may be used by an individual to verify their ID and submit a “Verification Statement”. There is little guidance on what this statement will entail, so please check back here for updates.
What should I do next?
All companies should ensure this new requirement is communicated to all existing directors and to any new directors they appoint going forward.
Where there are internal checklists for the appointment of a new director, the company should ensure this new requirement is incorporated into those checklists.
Once the legislation comes into force, Companies must ensure that all directors are compliant and have verified their ID. Failure to verify or allow a director to act as such whilst un-verified will be an offence under the new legislation. Similarly, it will also be an offence for a director to act as such in the time between being appointed by the company be that appointment being notified to Companies House.
If you have any queries regarding the above or have any other questions, please do not hesitate to contact Charlotte Leslie at 01865 261119 or email
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