Companies House reform: When will identity verification be implemented?

When will identity verification be implemented?

There is currently no date for when identity verification will be implemented. There are two reasons for this. Firstly, secondary legislation is required to determine what it means for a person’s identify to be verified. Policy-makers will need to consider what it means for someone’s identity to be verified and what independent evidence will be required to achieve this verification. They will also need to consider documents that are not in English and what will happen if someone is not able to provide typical identification documents. Legislation is also required to apply the requirements to LLPs. Secondly, the successful implementation of these ambitious reforms will depend critically on the resources available to Companies House. As the detail on identity verification is determined, Companies House will need to invest heavily in human resources and digital systems to receive and process the new data. For example, new digital systems will be required if a person’s identity is to be verified once for multiple companies (as envisioned in the Government’s White Paper on the subject).

What does the existing legislation tell us about implementation?

Despite there being no date for implementation, the existing legislation indicates that identity verification will comprise the following elements:

• The identities of directors and people with significant control will need to be verified before any new company can be incorporated.
• Any directors not identified on incorporation will need to be identified before the next confirmation statement is filed with Companies House (typically due soon after each anniversary of incorporation).
• PSCs will need to be identified by a date determined by the secondary legislation. Compliance with this requirement will need to be reported to Companies House within a short window of 14 days if the PSC is an individual or 28 days if the PSC is a legal entity. It is not clear yet when this period will start, if it will be staged and if it will be possible to report compliance early.

What will identity verification look like in practice?

The details of what identify verification will look like in practice will only become apparent once the secondary legislation is published. However, we do know the following from the existing legislation:

• Companies House expects authorised corporate service providers, such as Buzzacott, to play a key role in verifying the identities of directors and PSCs. If a director or PSC has been verified by a corporate service provider, then there will be no need for them to verify their identity directly with Companies House.
• If a PSC is a legal entity, the requirements will be satisfied by verifying the identity of an officer of that legal entity, such as a director. If that person ceases to be an officer of the PSC, then the identity of a new officer will need to be verified.
• It is likely that there will be circumstances in which a director or PSC will cease to be verified and will then need to be reverified. The details of these circumstances will be set out in the secondary legislation.

Our company secretarial team is tracking the implementation of identity verification closely

We continue to track the implementation of identity verification closely to determine what it means for our clients in practice. In the meantime, if you have a query about identity verification, please fill in the form below and one of our experts will be in touch.