Under new plans, outlined by the government to tackle money laundering and fraud, directors will not be able to be appointed until their identity has been verified by Companies House.
The clampdown aims to increase the reliability of the data showing who is behind each company, so that businesses have greater assurance when they are entering transactions with other companies, such as when small businesses are consulting the register to research potential suppliers and partners.
It will also improve the ability of law enforcement agencies, such as the National Crime Agency, to trace activity for suspected fraud or money laundering.
Identity verification will take place through a fast, efficient, digital process and is expected to take a matter of minutes.
These reforms will not impact on the typical speed at which a company or organisation is formed and other filings are completed. Most companies will be able to be incorporated easily within 24 hours as is the case now.
Data on Companies House informs many transactions between businesses and underpins credit scores and lending decisions. Register data were accessed 9.4 billion times in the last year, and research suggests it is worth up to £3 billion per year to users.
The reforms will give Companies House more powers to query and reject information, to improve the quality of data on the register, as well as affording users greater protection over their personal data, to help protect them from fraud and other harms.
Minister for Corporate Responsibility Lord Callanan said: “We are committed to making the UK the best place in the world to start and grow a business. The reforms we are making to the Companies House register will provide businesses with greater confidence in their transactions.”
Where any new controls are introduced, the government promised Companies House will keep the burden on business as low as possible and will continue to look for ways to make incorporation and access to its services as smooth as they can be.
For example, to facilitate the new identity verification requirement, Companies House will develop a fast, efficient, 24/7 digital verification process to minimise any strain on business, and prevent delays in incorporations and filings.
The government will consult on further changes to make Companies House more useful and usable, including reforms to the filing of company accounts.
Legislation will now be needed to enact the reforms.