There is a lot of fresh regulation for real estate investors to consider. Over recent years we have been updating you on the range of initiatives which fall under the head of corporate transparency. This article sets out a few of them, which (rather misleadingly) fall under the label of economic crime legislation.
If you are an overseas entity
You will reflect (probably not warmly) on this time last year when you were wrestling with the implementation of the register of overseas entities. The stress of initial registration within the short window August 2022 – January 2023 has now passed.
We are now in the middle of the first annual update season. If you had hoped and expected that maintaining register of overseas entities compliance would be simple, think again. The Economic Crime and Corporate Transparency Act 2023 received Royal Assent on 26 October 2023 and, whilst the relevant provisions have not yet been brought into force, it will require significant amendments to the disclosures already made by thousands of now registered overseas entities. In brief, there have been material changes to the rules where trusts are involved.
If you are a company incorporated in any part of the United Kingdom
The Economic Crime and Corporate Transparency Act 2023 will have a significant impact upon the operation of each company within your group. The legislation might be better described as a Companies Act (Amendment) Act because, in addition to economic crime measures, it is an act which amends current company legislation. Louise Smyth, the registrar, has described the new rules (which we have been waiting for since 2013) as “one of the most significant moments for Companies House in our long history”.
The new legislation will change a range of company procedures and the role of the registrar. Most of the changes will not be brought into force for some time because Companies House will need to build new systems and the registrar had no power to embark upon any material part of this work until Royal Assent was given.
The registrar will have significant new powers, clearer regulatory objectives and become much more active in scrutinising filings. In line with other trends, there will be increased data sharing with HMRC, law enforcement and other agencies.
One of the most important changes in company procedure will be the process for director appointment, verification of that person and the filing at Companies House for an appointment to take effect. At present, a company has 14 days to make the filing. This might feel like a boring point of technicality, but it will make significant changes to the way in which completion meetings are run and financing arrangements are put in place.
Enforcement
There will be a more active approach to enforcement. Indeed, we are already seeing Companies House acting in respect of company law breaches, such as bringing criminal proceedings against directors who have been dilatory in the filing of statutory accounts within the prescribed timescale. There will be a change of regulatory focus and directors need to be aware of this.