The Economic Crime and Corporate Transparency Act 2023 – An update for corporate pension trustees

Introduction

We last wrote about the Economic Crime and Corporate Transparency Act 2023 (the “Act”) in March this year and what it would mean for corporate trustees of occupational pension schemes.

Here is an update on what provisions are now in force, those which are still to be brought into force and what actions corporate trustees and sponsoring employers of pension schemes should be taking or thinking about just now.   

Now in force: Registered address and email addresses

As covered in our earlier briefing, changes that are now in force (as of 4 March 2024) are in relation to a company’s registered address.

All UK registered companies must have an "appropriate address" as their registered office. This means either: that any documents sent by post or delivered to the registered office will come to the attention of a person acting on behalf of the company (and the importance of this can be demonstrated by a number of recent Court cases involving appeals against TPR’s exercise of its auto-enrolment enforcement powers where compliance and penalty notices have not been sent to the correct address on behalf of the company); or that any documents sent to that address are capable of being acknowledged for recording purposes. 

Additionally, all UK registered companies must provide Companies House with an appropriate registered email address that it can use to communicate with the company. The address does not need to be public. It can be supplied when existing companies supply their next confirmation statement (after 4 March 2024) which must also now include a statement that the company’s intended activities will be lawful. 

Still to come into force: other changes

As our earlier briefing covered, there are also some other important changes that are coming in which corporate trustees should be aware of and consider in relation to their constitutional arrangements as follows:-

Identity verification

To recap, identity verification will be necessary for company directors, people with significant control (PSCs), and those who file on behalf of companies. The primary way to verify identity will be for the person undergoing verification to take a photograph of their face and their identity document and provide this directly to Companies House or through registered providers to then be compared. 

This will also affect filing of returns to Companies House as well, as the Act introduces a new requirement for anyone seeking to make filings on behalf of a UK entity to firstly be authorised by Companies House. The Act provides that only ID-verified individuals and authorised corporate service providers (authorised by Companies House), will be permitted to deliver documents. The latter will include company secretaries who would ordinarily have as one of their duties the filing of company returns at Companies House.  

Corporate directors will only be permitted if all directors are natural persons

The most significant change for a corporate trustee of a pension scheme is that corporate trustees will only be permitted to retain/appoint a corporate director if all of the corporate director’s own directors are natural persons and have been through the identity verification process as set out above.

For professional trustees who do not operate as sole (individual) trustees, this could create an additional administrative burden. Where a professional trustee is appointed as a trustee of a corporate trustee that sits within the sponsoring employer’s group, it is common practice for the professional trustee’s company, not the individual, to be appointed as a director of the corporate trustee, to sit alongside other individual trustee directors.  What this new changes requires is that all of the directors of the professional trustee company must be natural persons and had their identity verified.

As reported in a blog we published in March 2022, the initial White Paper which set out the premise of the then Bill (now the Act), specifically acknowledged the application of these provisions to pension schemes, given the widespread use of the corporate trustee model in the pension scheme context. Nevertheless, the government’s view was that a corporate trustee is no different from any other limited company, and, as such, no pension scheme specific exemptions were included. 

We understand a transitional period of twelve months will apply to existing companies (within which they must take steps to comply), although there is still no indication yet as to when this change regarding corporate directors might be brought into force. 

Other corporate implications of the ECCTA

There are also a number of corporate secretarial changes that the Act will introduce. Our banking and finance colleagues have written a blog on those changes. They include:-

• The Act will remove the requirement for companies to keep four internal registers in their company books (Register of directors; Register of directors’ residential addresses; Register of secretaries; and PSC register);

Instead, companies will simply file details of their directors, secretaries and PSCs at Companies House. The general public will be able to rely on this central record.

• The  Act gives more and new powers to the Companies House Registrar (as of 4 March 2024). The Registrar will be able to query or reject filings, request further information be provided in relation to filings, remove information already on the register in some cases and share information with other government departments and law enforcement agencies.

Takeaways for Trustees and Sponsoring employers

The actions for trustees and sponsoring employers are as follows:-

• If you are a corporate pension trustee or your pension scheme has a corporate trustee, be aware of the changes to the company’s registered address and email address that are now in force and ensure those new requirements are being complied with, together with the required statement on the company’s intended business activities. 
   
• In relation to the identify verification requirements, look out for these provisions coming into force and when they do, ensure your trustee company or your pension scheme’s corporate trustee know when the corporate’s directors, PSCs and company secretary will be required to complete identity verification at Companies House.
   
• Speak to the Company secretary (or other person or entity who routinely makes filings on behalf of the corporate trustee) review how you will make filings – i.e. how filings at Companies House are intended to be made under the new regime and how the identify verification requirements set out above will be met. 
   
• If you are a professional trustee company, consider whether all directors are natural persons and, if so, ensure your directors, PSCs and company secretary complete identity verification at Companies House when required. If your board does not comprise of natural persons, seek legal advice as to what changes will be needed to the composition of your board and/or your contractual arrangements with sponsoring employers.

If you are interested in discussing any of the above change and how they might affect your trustee company or pension scheme, please do get in touch with your usual Burges Salmon pensions contact or Pensions Partner, Susannah Young. If you require specific corporate secretarial advice we would also be delighted to put you in touch with one of our corporate colleagues. 

Current as at 25 September 2024.