Jonathan Hazlett: Some of the changes being made by ECCTA are already in force; others are on the way
The Economic Crime and Corporate Transparency Act 2023 (ECCTA) affects all UK registered companies – including professional and non-professional trustee companies.
Some of the changes being made by ECCTA are already in force; others are on the way. There are at least five actions that trustee companies should take now.
1. Check that you're meeting requirements introduced in March 2024
All UK registered companies must have an "appropriate address" as their registered office. Broadly speaking, an "appropriate address" is an address where documents will come to the attention of a person acting on the company's behalf or, otherwise, any documents sent to that address will be acknowledged.
All UK registered companies must provide Companies House with an appropriate registered email address that it can use to communicate with the company. (This won't be made public.)
All UK registered companies must give a statement to Companies House that the company's intended future activities will be lawful.
Companies must confirm lawful purpose and their registered email address in the first annual confirmation statement they file with Companies House after 4 March 2024. Additional requirements will apply if it is necessary to change registered office address to meet the "appropriate address" requirement.
2. Prepare for identity verification and director appointment changes
New identity verification requirements are on the way. All existing trustee directors will need to verify their identity with Companies House. In other words, prove to Companies House that they are who they say they are. When the new requirements are introduced, existing trustee directors will be able to verify their identity using a digital service to be set up by Companies House or through an authorised corporate service provider (ACSP) such as a firm of accountants or solicitors.
Identity verification requirements will also apply on future changes to the trustee directors. This would include the appointment of a new trustee director, whether employer or member-nominated.
And they will apply to persons with significant control (PSCs) or relevant officers of relevant legal entities (RLEs). PSCs and RLEs are, in effect, individuals or entities that exercise influence or control over a trustee company.
The key for trustee companies is to understand who will co-ordinate compliance with these new requirements.
Trustee companies also need to plan for the fact that, when the changes come into effect, new trustee directors will not be able to act until their identity has been verified. It may be necessary to wait until their identity has been verified and their appointment has been notified to Companies House. This could affect the ability of the trustee board to make decisions quickly when a new trustee director is appointed.
3. Prepare for filing changes
Identity verification will also affect filings with Companies House. When the new requirements start to apply, only individuals whose identity has been verified and ACSPs will be able to deliver documents to Companies House. Anyone who files documents at Companies House will also have to make an "accompanying statement", the contents of which are currently unknown.
In practice, if another group company files documents at Companies House for the trustee company, it may be enough to ask the filer what they plan to do and check that they'll continue to file for the trustee company.
4. Prepare for a ban on corporate directors
A ban on corporate directors is being brought in alongside the changes being made under ECCTA. The general rule will be that all directors of a trustee company must be natural persons.
On first sight, this ban has the potential to cause real problems for professional trustee companies. They are often appointed – as a corporate director – to sit alongside the other directors of an existing trustee company.
In some cases, the "corporate tree" of the professional trustee company may also include companies with corporate directors. Trustee companies may want to review their company and group structure to identify any corporate directors.
Current indications are that there is likely to be an exemption where a corporate director is a UK company and all its directors are natural persons who have verified their identity. However, this hasn't been confirmed, so trustee companies should look out for further developments.
5. Take a wider look
ECCTA also affects the registers that a trustee company needs to keep and what information must be provided to Companies House. There are new requirements regarding the preparation, audit and filing of company accounts, including changes for small companies and micro-entities which will be relevant for a number of trustee companies and some smaller professional trustee firms.
In addition, ECCTA introduces a series of new criminal and civil penalties and enforcement powers for failure to observe its provisions and brings changes affecting other corporate structures.
Given the wide range of the ECCTA reforms, trustee companies may want to take specialist company secretarial and / or legal advice on what ECCTA could mean for them.
Jonathan Hazlett is partner and head of UK pensions at Osborne Clarke
