The Economic Crime and Corporate Transparency (ECCT) Act 2023 has introduced significant changes affecting the appointment of directors for businesses in the UK.
These changes, which are part of a broader initiative to enhance corporate transparency and combat economic crime, began to be phased in from 1 March 2024, and will continue through 2026.
As we are now midway through the implementation, businesses should understand and comply with these new obligations when appointing directors to ensure they comply with the updated regulations.
Key changes for appointing directors
Identity verification for directors
Starting in the first half of 2025, all new and existing directors must undergo identity verification as mandated by the ECCT Act. The identity verification process will become mandatory for all directors, with a 12-month transition period for current officeholders.
Directors will need to be verified at Companies House before they are appointed, otherwise they will be in breach of the ECCT Act and could be open to prosecution.
This measure aims to improve the accuracy and integrity of company information.
Restrictions on corporate directors
The Act imposes new restrictions on the appointment of corporate directors to promote transparency.
Corporate directors will not be permitted unless they have complied with the verification requirements under the ECCT Act, which will require all directors of such corporate director to have been individually verified.
Steps to ensure compliance
To comply with the new regulations, businesses should take the following steps when appointing directors:
Verify identities promptly – Ensure that all new directors are verified before they are formally appointed to the board of directors. This can be done by the director themselves or through a registered service provider.
Prepare existing directors for the upcoming identity verification process to meet the spring 2025 deadline.
Update director information – Regularly review and update director information to ensure accuracy and completeness.
This includes maintaining up-to-date records of director identities and other required details.
Understand corporate director restrictions – Familiarise yourself with the new restrictions on corporate directors and ensure that your company’s appointments comply with these regulations.
Remaining up to date with changes
As these new requirements continue to be phased in, businesses must remain informed and proactive.
Our team are experts in company secretarial services and are here to assist you. We will be able provide expert guidance on verifying director identities and ensuring compliance with the ECCT Act.
For more information and assistance, contact our team today. We offer comprehensive support to help your business meet its legal requirements under the updated Companies House regulations.
