Economic Crime and Corporate Transparency Act 2023 series: financial penalties

From 2 May 2024 Companies House is set to receive new powers to impose financial penalties for non-compliance with company legislation.

Currently, the Registrar of Companies operates a civil penalty regime only for late filing of accounts. Under the new regulations (The Economic Crime and Corporate Transparency Act 2023 (Financial Penalty) Regulations 2024) the Registrar will be able to impose direct financial penalties for a wider range of offences under the Companies Act 2006 (CA 2006). These changes form part of a package of reforms which is transforming the role of Companies House into an active gatekeeper of corporate information. As a quicker and cheaper alternative to criminal prosecution, it is hoped that the new financial penalty regime will have a positive impact in the fight against misconduct.

The new regime will sit alongside the existing criminal sanctions and will enable the Registrar to impose penalties of up to £10,000 if satisfied, beyond reasonable doubt, that a person has engaged in conduct amounting to a relevant offence under CA 2006. The definition of ‘relevant offence’ is wide, covering all offences under CA 2006 save for those set out in Part 12 relating to company secretaries, Part 13 relating to resolutions and meetings and Part 16 relating to audit.

The regulations set out a procedure for the Registrar to issue warning notices, time periods for compliance and penalty notices. A procedure for appeals against penalty notices is also included. In all cases the Registrar will have discretion to choose whether to pursue a financial penalty or pass to law enforcement to consider criminal sanction. Companies House has announced that it will publish guidance on the approach it will be taking for enforcement before it starts issuing financial penalties.