Companies House reform: Movement at last?
11 April 2022
Companies House, the central register of company information in the UK, is a crucial component of the UK’s corporate governance framework, but doesn’t yet have formal investigatory powers to verify the accuracy of information that companies send to it.
This looked set to change in May 2019, when the Government published the Corporate Transparency and Register Reform consultation, which explored “options to enhance the role of Companies House and increase the transparency of UK corporate entities.”
However, despite significant parliamentary debate on the issue, to date no progress has been made in progressing these proposals onto the statute book.
Resignations and debates
Movement on this issue was triggered at the start of this year when Treasury and Cabinet Office Minister Lord Agnew resigned at the Dispatch Box over how the Government handled fraudulent COVID business loans.
In his resignation speech, Lord Agnew criticised the Government’s failures to address fraud and highlighted his concern about the amount of money lost to fraud under the Bounce Bank Loan Scheme.
Soon after, Kevin Hollinrake MP asked an Urgent Question about Government plans to introduce its long-awaited Economic Crime Bill in support of his concerns, and urged the Government to act quickly on this issue.
Our suggestions about the Bill and ongoing criticism of the Government’s failure to act on the issue were echoed by parliamentarians in the debate that followed, with ministers reproached for the lack of urgency exhibited on the issue of Companies House reform.
Following Lord Agnew’s resignation, we wrote to MPs who have taken part in the debates around the Economic Crime Bill and who had raised concerns about it this year to further highlight the importance of Companies House in supporting the insolvency and restructuring profession’s fight against fraud.
It has now been confirmed that the government is “bringing forward the Economic Crime Bill, and it will be voted on in the third Session of this Parliament”, which means the bill will be discussed later this year, and we will continue to engage with parliamentarians on this issue.
The proposed legislation
We discussed the proposed reforms to Companies House in this blog from last February, but to summarise, the Bill is expected to include:
- Introducing compulsory identity verification for all Directors, People with Significant Control, and those filing information on behalf of a company.
- Providing the registrar of companies with stronger powers to query, seek evidence for, amend or remove information and share it with law enforcement partners.
- Improving the processes for removing personal information from the register.
- Introducing full digital tagging of company accounts.
Our view of the proposals
R3 has long supported Government efforts to tighten procedures regarding company formation and oversight, and we have consistently lobbied for the reforms proposed in the Economic Crime Bill for many years.
We support the current proposals, but believe they can be evolved to enable insolvency practitioners to play an even greater role in tackling corporate fraud.
In our response to the Government’s 2019 consultation, we made a number of suggestions as to how this could be facilitated, which included allowing insolvency practitioners to access additional ‘back-office’ information, and making the restoration of a dissolved company an administrative process which does not require an application to court.
We’ll continue to call for these amendments to be included once the Economic Crime Bill begins its legislative journey, and hope the Government will work with us to increase the profession’s role in improving the integrity of the UK’s corporate governance framework – and supporting the fight against fraud.
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