Key Facts

• New clause 35 aims to disqualify individuals convicted under section 31 of the National Minimum Wage Act 1998 from serving as company directors after a certain date.
• Clause 43 discusses the registrar’s power to change a director’s service address, with an amendment made by Kevin Hollinrake.
• The Bill introduces substantial regulation about who can serve as a company director based on criminal or potentially criminal practices.
• Clause 44 amends sections 112, 113, and 115 of the Companies Act 2006.
• Clause 45 inserts new section 113A into the Act.
• The rectification power under Clause 46 is broadened to cover any information on the members register.
• Clause 44 amends the Companies Act 2006 to specify 'name' as a forename and surname in company registers.
• Transparency International notes limited access to shareholder information.
• Clause 45 allows for future regulations to change required information in company registers.
• The Bill includes measures allowing companies to opt out of central register disclosure.
• Clause 49 requires companies to submit a one-off snapshot of shareholder information.
• Companies are already required to file confirmation statements at least annually, which record changes in membership information.
• The Government is considering how best to display shareholder information in a user-friendly format.
• Amendments include adding unique identification numbers for directors.
• The registrar may limit the number of directorships an individual can hold.
• Factors considered by the registrar are experience, expertise, and circumstances.
• The Government decided a single source of information about companies is preferable.
• Schedule 2 details requirements to implement the new registers regime by repealing obligations to maintain local registers.
• Companies will have additional reporting obligations including verifying director identities and confirming individual eligibility.
• Amendment 68 aims to limit the number of directorships an individual can hold.
• Bill Browder questioned why someone could be a director of up to 400 companies, suggesting a cap of around 10 as reasonable.
• Professional bodies like the Association of Accounting Technicians recommend a cap on directorships due to concerns over criminal activity and abuse of company structures.
• Amendments 69 and 70 seek to introduce unique identification numbers for directors.
• Labour has amendments to tighten these provisions.
• Witnesses suggested a limit on the number of directorships, with some suggesting caps between 15 and 25 as reasonable.
• The MPs highlight cases where individuals appear multiple times in the Companies House register under different names or details.
• Clause 66 is discussed regarding the allocation of unique identifiers.
• Amendment 68 specifies criteria for Companies House's determination under clause 66.
• The minister mentions a consultation period between 2019 and February 2021.
• Kevin Hollinrake has directorships listed on Companies House, demonstrating ease of access to such information.
• Clauses 52 to 56 amend the Companies Act.
• The changes will streamline filing obligations for micro-entities.
• Personal information, such as dates of birth, will be protected from public disclosure.
• Clause 52 requires micro-entities to file both balance sheets and profit and loss accounts.
• Clause 53 mandates small companies to submit a profit and loss account and directors’ report.
• A company is classified as a micro-entity if it meets any two criteria: turnover of £632,000 or less, balance sheet total of £316,000 or less, or 10 or fewer employees.
• Clause 55 requires directors to provide additional statements for audit exemptions under specific thresholds.
• The current threshold for audit exemption is £10.2 million.
• There were 1.3 million micro-entity accounts filed in 2019-20.
• Clause 57 obliges companies to notify the registrar of additional information required under new requirements before or at the same time as delivering their annual confirmation statement.
• Clause 58 ensures the registrar has up-to-date information for effective investigations and sanctions.
• Clause 59 requires notification of changes in principal business activities during incorporation.
• Clause 60 amends section 853J(4) and 853L(1) of the Companies Act to clarify criminal offences related to confirmation statements.
• Clause 61 introduces requirements for people who own or control companies to undergo ID verification.
• The UK was the first G20 nation to introduce a public beneficial ownership register with over 5.8 million entries.
• Secondary legislation about ID verification will be made using the affirmative procedure after Royal Assent.
• The Bill covers clauses 61 to 67, taking up 15 pages.
• Since its launch in 2016, the PSC register has made progress towards corporate transparency but still has loopholes.
• A 25% ownership threshold allows easy circumvention of registration requirements.
• Belize and Jersey use a 10% ownership threshold.
• The Government launched four separate consultations on Companies House reforms since May 2019.
• There are concerns about outsourcing ID checks to unregulated third-party service providers (ACSPs).
• ACSPs pose a high risk of being used for money laundering.
• The Bill lacks order-making powers for Companies House to verify directors or beneficial owners.
• There has been only one fine of £210 since rules came into place for people with significant control over Scottish limited partnerships.
• A tender for a verification system closed on October 24, 2022, before the Bill's completion.
• Amendment 109 prevents authorized corporate service providers from making verification statements before the completion of the Treasury’s review.
• Amendment 78 requires regulations to include a photograph and document issued by a recognized authority for identity verification.
• Amendment 112 seeks to remove lines 4 to 26 on page 48.
• Four consultations have already taken place on the topic of verification processes.
• The amendments aim to reflect international best practice guidelines published by organisations such as the Financial Action Task Force, IMF, and World Bank.
• The amendment aims to close loopholes in legislation.
• A 2017 Europol report found UK companies involved in a high proportion of suspicious transactions linked to money laundering.
• Appleby, a UK-headquartered legal firm, was criticised for flawed compliance procedures in multiple audits by tax haven authorities.
• The FinCEN files revealed over 3,267 UK shell companies were established through flawed processes, with one corporate service provider setting up 385 of these companies.
• Transparency International research identified 1,628 LLPs used in corruption and money laundering schemes over a 12-year period involving $730 billion of suspicious funds.
• About half of the corporate entities established in the UK are set up by TCSPs.
• HMRC rarely imposes fines on TCSPs; only five out of 283 financial penalties given out by HMRC in 2021-22 were awarded to TCSPs.
• Margaret Hodge refers to a story involving Savaro Ltd, a UK company linked to illegal activities in Syria after an explosion in Lebanon.
• The amendment 78 would restrict ID verification processes until HM Treasury completes its review of the AML supervisory regime and reports it to Parliament.
• Kevin Hollinrake argues that the practical effect of amendment 78 could unfairly delay legitimate businesses from reporting identity checks to Companies House.
• OPBAS reports that 50% of professional body supervisors are ‘fully effective’.
• The amendments would limit documents acceptable for ID verification to Government agencies and official authorities.
• GPG 45 allows the use of non-photographic documents such as birth certificates, marriage certificates, and utility bills for identity verification.
• Amendments seek to remove parts of clause 62.
• About half of company formations are currently submitted by third parties.
• Corporate service providers must register with Companies House and an AML supervisor.
• Clause 63 introduces requirements for third-party agents who wish to provide corporate services to be registered with Companies House as ACSPs.
• Amendment 82 would require HMRC's fit and proper person test for ACSP registration.
• Amendments aim to tighten oversight of TCSPs but are considered unnecessary by the minister due to existing regulatory obligations.
• Proposed new sections 1098F and 1098G will enable Companies House to suspend or deauthorize ACSPs.
• Amendment 99 inserts language ensuring NCA assessment.
• Amendment 100 prevents disqualified providers from operating in the UK.
• Amendment 98 seeks removal of enabling provisions for foreign service providers.
• Clause 64 ordered to stand part of the Bill.
• Further consideration was adjourned till Tuesday 8 November at twenty-five minutes past Nine o'clock.