You’ll have seen recently that the Economic Crime and Corporate Transparency (ECCT) Bill was introduced to Parliament in September. This is a significant step forward in allowing us to make fundamental reforms to the legal framework within which Companies House operates, but the ECCT Bill is just at the start of its journey.
To become an Act, the Bill must be passed by the Commons and the Lords (in either order) and receive Royal Assent. It can be passed with or without amendment, but the Commons and Lords must both agree the text. The Bill can also only be changed by formal amendment.
The Bill is likely to achieve Royal Assent in the spring of 2023, but the passage through Parliament is a winding path of debate and examination where proposals for amendments can be made at several stages.
How the Bill will become law
Bills may start in either the House of Lords or the House of Commons, but most start in the House of Commons.
- First reading – the title of the Bill is read in the House with no debate.
- Second reading – a general debate on the Bill in the House, opened and closed by the Minister, with questions at the end.
- Committee stage – a detailed examination of the Bill by Committee. Amendments can be made by vote. This stage can last weeks.
- Report stage – a debate in the House of the Bill plus amendments.
- Third reading – a final debate on the Bill in the House, immediately after the report stage.
- The Bill goes to either the House of Lords or the House of Commons and the process is repeated.
- Consideration of amendments – the second House’s amendments are considered, and the Bill may go back and forth until both Houses agree on the Bill.
- Royal assent – the Bill must have Royal Assent before it can become an Act of Parliament (law). The Act usually comes into force from midnight at the start of the day of Royal Assent.
The Bill is currently at the second reading stage in the House of Commons (as of 13 October 2022) so there are a few more stages to go before the final wording is agreed, and the Bill becomes an Act. In the meantime, we are working hard behind the scenes to prepare for the changes that the Bill will introduce.
How the Bill will affect Companies House
The Bill will reform the role of Companies House and improve the transparency of UK companies and other legal entities. The changes include:
- introducing identity verification for people who register companies or file with Companies House; this will improve the accuracy of our data and support business decisions and law enforcement investigations
- broadening our powers so that we become a more active gatekeeper over company creation and a source of more reliable data; Companies House will be given new powers to check, remove or decline information
- improving the financial information on the register so that it’s more reliable, complete and accurate, reflects the latest advancements in technology, and enables better business decisions
- strengthening enforcement powers and better cross-checking of data with other public and private sector bodies; we’ll be able to proactively share information with law enforcement bodies where they have evidence of unusual filings or suspicious behaviour, enhancing the protection of personal information provided to Companies House to protect individuals from fraud and other harm
Our Companies House Chief Executive Louise Smyth recently said:
We welcome the measures outlined in this Bill, which represent the most significant and far-reaching changes to the UK’s company register in over 170 years of history and will enable us to play a much stronger role in making the UK a great place to do business.
If agreed, these changes will allow us to actively improve and maintain the integrity of the register like never before, inspire greater trust in our data, crack down on economic crime, and further drive confidence in the UK economy.
While the scale and scope of these changes should not be underestimated, the work already done through our wide-ranging and ongoing transformation programme puts us in a strong position to implement them as quickly and efficiently as possible.
Change will not happen overnight, but we hope to deliver some of the measures as early as possible following Royal Assent with others being implemented over time.