How to improve the company law reforms in the Economic Crime and Corporate Transparency Bill

The proposals

The government hopes its Economic Crime and Corporate Transparency Bill will strengthen the UK's reputation as a place where legitimate businesses can thrive while driving dirty money out of the UK.

The proposed reforms to Companies House – its biggest upgrade in 170 years – will also see the organisation given new powers to check, challenge and decline incorrect or fraudulent information.

Companies House's investigation and enforcement powers will also be upgraded, enabling it to cross-check data with public and private partners, as well as reporting suspicious activity to security agencies and law enforcement.

Our view

With the City of London Law Society, we welcome the introduction of the bill into Parliament.

We support the government's ongoing commitment to:

• tackling economic crime
• preventing the misuse and abuse of limited partnerships and corporate structures
• increasing the integrity of the registers maintained by the registrars of companies (the registrar)

In particular, we support measures to enhance the registrar's powers to query, correct and remove information on the various public registers for which they are responsible.

The registrar's current powers are limited, often meaning that simple corrections to filings that have been made in good faith but which are incorrect are not possible without a court order. This can in turn cause difficulties, expense and administrative burdens for businesses.

We welcome the opportunity to engage with the government on the drafting and passage of the bill.

Our full response contains suggestions that will help the government consider the issues arising from some of the proposals and serve to improve or clarify certain points in the draft legislation.

Our suggestions are based around the general themes of:

• proportionality – achieving the bill's objectives while avoiding imposing a disproportionate burden or risk of criminal liability on persons who take reasonable measures to comply
• clarity and certainty – ensuring the law is easy to understand, particularly for small businesses that may not have access to specialist company lawyers, and that it is not ambiguous or open to misinterpretation
• the UK as a destination for business – seeking to avoid legitimate businesses being deterred from the UK or choosing to incorporate their entities in another jurisdiction

Next steps

The bill is currently working its way through Parliament.

It is expected to become law in spring 2023.