Key Facts

• Amendment tabled by the Member for Barking.
• Thom Townsend from Open Ownership stated the current clause is a 'ridiculously low bar'.
• The amendment aims to include an objective for proactive identification of suspected criminal uses.
• The amendment aims to embed Government's intent for Companies House to take a proactive role in using information to combat economic crime.
• Companies House holds data on over 4.5 million companies, with more than 800,000 new incorporations annually and over 10 million documents filed yearly.
• Examples of misuse include five beneficial owners controlling over 6,000 companies and one individual listed as a 'Mrs' who is under two months old.
• The proposed amendment would be inserted into clause 1, page 2, line 10.
• The amendment aims to require the Secretary of State to provide sufficient resources for Companies House to fulfill its new responsibilities.
• Previous legislation has often lacked enforcement and proper funding.
• The amendment aims to ensure Companies House is adequately resourced.
• Bill Browder and Catherine Belton testified about UK corporate structures being used by Putin's allies to move money abroad.
• Only one prosecution has occurred despite hundreds of billions of pounds in stolen funds laundered through UK corporate structures.
• The current fees for Companies House are set at a level commensurate with its activities.
• £63 million has been allocated in the spending round for personnel and technology improvements.
• External expertise is being brought in to assess resource requirements.
• Recommendations from experts will be discussed with the Department and presented to Parliament under the affirmative procedure.
• The objectives introduced in the Bill signal a significant step change for Companies House since its establishment in 1844.
• Companies House will no longer simply accept information passively but will query and reject filings that do not meet standards.
• The new powers include analysing and sharing information with other bodies, including law enforcement.
• The legislation is designed to tackle economic crime and protect UK national security.
• Criminals misuse companies, necessitating stronger safeguards and resources.
• Anti-corruption organisations have stated that current objectives are too weak.
• Amendment 85 would require memorandums on company formation to include nationality and country of ordinary residence for subscribers.
• Clause 2 amends section 8 of the Companies Act 2006 regarding the definition of 'name'.
• Transparency International has noted a poor reputation of the UK as a hub for dirty money due to lack of transparency in company ownership.
• The Bill aims to improve transparency requirements for UK companies.
• Currently, subscribers do not need to state their full name; they can use initials or a pseudonym.
• Clause 2 mandates that each subscriber must provide their forename and surname when forming a company.
• Persons of significant control include those who hold more than 25% of shares or voting rights, have the right to appoint/remove board members, or influence/control through nominees.
• The definition of ‘persons with significant control’ accounts for individuals who may not hold any shares but still have influence over a company.
• Clauses 3 to 8 require those forming companies to confirm they are doing so for lawful purposes.
• Clause 4 enables the registrar of companies to reject applications if subscribers or initial shareholders are disqualified directors.
• Under clause 5, proposed directors must either verify their identity or be exempt from verification requirements.
• The Bill aims to prevent companies from registering for unlawful purposes.
• Clause 4 ensures that a disqualified director cannot form a new company.
• Clause 5 requires directors to verify their identity on application to the registrar.
• The discussion includes clauses 9 to 13 of the Economic Crime and Corporate Transparency Bill.
• No specific new programmes or funding commitments are proposed.
• Clause 9 gives the Secretary of State power to prevent registration of company names intended for dishonesty or deception.
• Up to 100 cases of corporate identity theft are dealt with every month by Companies House.
• Clause 10 prohibits company names falsely connected to foreign Governments and international organisations.
• Graham Barrow highlighted issues with Companies House's ability to enforce similar name rejection due to high volume.
• The suggestion was to introduce 'a little bit of friction' by taking more time to assess and analyse applications.
• Clause 11 aims to prevent names containing computer code that could corrupt systems through SQL injection, but clarity is sought on the definition of what constitutes computer code.
• Relevant legal entities have 28 days to rectify their identity from receipt of the registrar’s direction.
• Companies House has a security capability that will develop and evolve over time.
• The decision on company names is made by Companies House under delegated authority.
• Trading styles or business names are not directly overseen by Companies House, relying instead on third-party information.