THE ECONOMIC CRIME AND CORPORATE TRANSPARENCY ACT 2023 – WHAT DO CHARITY TRUSTEES NEED TO DO?

The first tranche of provisions of the Economic Crime and Corporate Transparency Act 2023 (ECCT Act) came into force on 4^th March 2024. If you are a charitable company, if you have a trading subsidiary or if you have a corporate trustee, you need to be aware of these changes and take any action as necessary.

The three main changes introduced by the ECCT Act at this time require all companies to (i) register an email address with Companies House, (ii) have an appropriate registered office, and (iii) submit a ‘lawful purpose’ statement.

Every company will need to register an email address with Companies House. Each company does not need to have a unique email address: therefore, an agent or adviser’s email address can be registered. Directors should review this and consider the most appropriate email address to use to ensure that correspondence will be properly received and circulated as necessary.

The ECCT Act requires each company to have an appropriate registered office – an address where correspondence sent to the company will be received by the company or by a representative of the company and delivery can be recorded/acknowledged. Therefore, companies will no longer be able to use PO boxes as a registered office address. The same rule will apply to directors and their service addresses.

The introduction of the ‘lawful purpose’ statement requires companies to confirm that its current and future activities are, and will be, lawful.

For existing companies, the above changes will all come into play the next time companies file their annual confirmation statement after 4^th March 2024. The consequences of failing to comply with these changes can be severe and include criminal offences and civil penalties committed by the company and/or every officer in default, subject to a reasonable excuse defence.

While those are among the first set of changes implemented under the ECCT Act, future changes include (and note that this is not an exhaustive list):

• Increased Companies House fees from 1^st May 2024;

• Greater powers afforded to the Registrar of Companies to challenge information filed at Companies House, as well as information already on the Register. Currently, filing at Companies House is relatively passive. Where information is found by the Registrar to be incorrect, entries can be annotated to highlight this;

• All directors and persons with significant control (PSCs) will need to verify their identity with Companies House. Failure to do to so will mean that a person cannot act as a director. Once this rule is in force, the Registrar will not register a director’s appointment until their identity is verified. If a person acts as a director at a time when they have not verified their identity, they will have committed a criminal offence. An offence will also have been committed by the company itself and every other officer that allows the non-verified director to act;

• The filing of hard copy, paper accounts will be phased out and accounts will be required to be submitted using filing software;

• Corporate directors will effectively be abolished unless they are UK-based and they themselves have only human directors.

The changes brought in on 4^th March may not require immediate action from your directors or your company secretary (if you have one), as your next confirmation statement may not be due for some months, but we recommend that early consideration is given to these matters to ensure the continued smooth and lawful operation of your charitable company, trading subsidiary or corporate trustee, as the case may be.

If you have any queries in relation to the ECCT Act, please get in touch with your usual Turcan Connell contact or email us at charities@turcanconnell.com.