The Economic Crime and Corporate Transparency Act received Royal Assent on the 26 October 2023, introducing new laws to combat economic crime. The Act is set to drastically reform Companies House and introduce significant new requirements for all new and existing UK limited partnerships.
Whilst secondary legislation will need to be published and approved before many of the new rules are brought into force, LPs should familiarise themselves with the new obligations ahead of time, to ensure they have sufficient compliance procedures in place. We take a look at some of the key changes below.
Registration and Information Requirements
The ECCTA introduces enhanced registration requirements for the registration of new LPs. For partners who are individuals, applications will now need to include the partners’ names, any former names, their dates of birth, residential addresses, jurisdiction of usual residency, and in the case of general partners, an address for service.
For partners who are legal entities, LPs will need to provide Companies House with the legal name of that entity, its principal office, service address, as well as the governing law to which that entity is subject.
General partners must provide Companies House with an email address and a managing officer’s contact details. Similarly, in the case of a legal entity being a general partner, LPs must ensure that there is always an individual who Companies House may contact if required.
Connection to the UK
LPs must now have a registered office at an appropriate address in the UK where any documents delivered can be expected to be seen by the LP. This must either be the LPs principal place of business, the registered principal office of a general partner, or for an individual who is a general partner, its usual residential address.
It is common practice for some LPs after registration to switch to a non-UK general partner or to make their principal place of business outside the UK. These LPs will need to appoint a UK based general partner or an authorised corporate service provider to ensure they comply with this provision.
Changes in information notification
If there is a change in the partners of an LP, general partners will now be required to notify Companies House of not only the name of that new partner, but also all of the new information requirements set out above.
Annual confirmation statements
Whilst this obligation already exists in a simpler format in relation to Scottish LPs, all English LPs will now be required to submit an annual statement confirming that the information held on Companies House’s register is correct.
Verification Requirements
To increase corporate transparency and prevent the use of LPs (and Companies generally) for nefarious purposes, the ECCTA introduces new identity verification requirements for all new and existing company directors, PSCs and those delivering documents to the Registrar. These individuals must verify their identity with Companies House, and may do so directly themselves or indirectly through an Authorised Corporate Service Provider (ACSP). Under the ACSP regime intermediaries such as accountants, legal advisers and company formation agents who may provide relevant services have to be registered to do so with a supervisory body for anti-money laundering purposes.
It appears the parliamentary draftsperson envisages ACSP’s handling most filings and ACSP’s will of course need to carry out due diligence checks to verify the information they are submitting.
Whilst the government has stated that they will begin to introduce the identity verification system sometime in 2024, general partners should make sure that they have procedures in place to allow them to provide any requisite information to ACSPs quickly so that they make any filings without delay.
Consequences of non-compliance
Failure to comply with any of these new obligations can result in the general partners and their managing officers committing a criminal offence. This may also result in dissolution of the LP by Companies House.
Failure of an existing LP to file any required information, the end of the transitional period (6 months as set out within the Act) can, crucially, result in the LP being dissolved by the Registrar of Companies without any prior warning.
Conclusion
It is clear that the reforms introduced by the ECCTA will impose significant additional administrative burdens on businesses who use or invest in UK LPs. LPs should review and ensure they have all of the required information, as well as a system of checks and balances to ensure that any information can be notified to Companies House without delay, and in any case before the end of the transitional period.
Whilst many of the reforms are yet to be brought into force, the government has indicated that some key provisions will be introduced in early 2024. LPs will have 6 months from any relevant commencement date to ensure they are compliant.
If you require advice in understanding your new obligations, or reviewing your business’ existing compliance procedures, please contact Elborne Mitchell’s Corporate and Regulatory teams for further assistance.
Callum Asten, Assistant Solicitor / December 2023
