UK to implement new identity verification rule for company directors
November rollout part of major changes to Companies House.
Britain's crackdown on misuse of the UK companies register will see the implementation of a new identity verification rule for company directors beginning 18 November.
Part of reforms introduced by the Economic Crime and Corporate Transparency Act 2023 (ECCTA), the identity verification requirement seeks to provide greater assurance about who is setting up, controlling, and running businesses in the UK.
Mandatory identity verification applies to both new and existing directors and people with significant control (PSCs). It is estimated that at least six million individuals will have to verify their identity.
"Companies of all sizes will benefit from more accurate and trustworthy register data and greater protections against fraud," said the UK government, which will be contacting firms to let them know what their directors and PSCs have to do in order to comply.
"We are phasing in identity verification over 12 months to provide the best support to all companies and individuals in scope of this new requirement."
Identity verification part of 'radical transformation' of Companies House's role
According to the UK government, the ECCTA is making the biggest changes to Companies House since the establishment of corporate registrations in 1844.
By reforming Companies House's role and improving transparency, the goal of the legislation is to strengthen the business environment in the UK while supporting the country's national security and disrupting economic crime.
Changes include improving the quality of information on the register (e.g. removing inaccurate details and rejecting misleading company names) and sharing more data with regulators and law enforcement agencies to help address criminality.
In a previous note, global law firm Herbert Smith Freehills Kramer commented: "Once implementation of the ECCTA is complete, the landscape for administration of companies in the UK and the role of Companies House as the custodian of the register of companies will have been radically transformed."
As for the identity verification requirement, Competition and Markets Minister Justin Madders MP believes it will play a key role in boosting investor and consumer confidence. Companies House CEO Louise Smyth CBE also pointed to the intended result of enhancing the reliability of companies register data and tackling misuse.
