What's happening?

Recently, core provisions have come into force under the Economic Crime and Corporate Transparency Act 2023 (ECCTA), which have practical implications and potential risks for UK corporate entities who are not up to speed with the latest new measures.

Since 18 November 2025, all newly appointed individual directors of UK companies, as well as all new individual LLP members or people with significant control (PSCs) of newly incorporated UK companies or LLPs, have been required to complete identity verification (IDV). Existing individual directors, or LLP members must complete IDV by the date their company's next annual confirmation statement is due at Companies House after 18 November 2025—and in any event, before the end of the 12-month transition period. Existing PSCs of UK companies and LLPs will also need to complete IDV checks within the transition period (the exact timetable for compliance for PSCs is more complex). The key takeaway here is that we are currently in a transition year, during which millions of individuals are required to satisfy the IDV hurdle.

Where IDV has not been completed, this could have implications for both corporate and loan finance transactions. For example, lenders may require additional checks and confirmations regarding a director’s IDV status. In corporate transactions, IDV compliance will need to be verified as part of the due diligence process.

ECCTA has also changed the rules on statutory registers for UK companies and LLPs. New rules introduced on 18 November 2025 mean that it is no longer a requirement to maintain a register of directors (and if applicable a register of secretaries) in-house. Instead, UK companies and LLPs should file and maintain this information at Companies House. "In scope entities" (which includes most UK companies and LLPs) should now also file and maintain their PSC information solely on the public register at Companies House. UK companies and LLPs should continue to maintain their own register of members. This places a higher burden to make sure that corporate filings are accurate and made promptly, especially as ECCTA introduces a raft of more robust penalties for filings of inaccurate information to Companies House. On loan finance transactions, a key practical implication is to consider the appropriate scope of conditions precedent (e.g. to cover PSC information, which is now only available from Companies House).

Why it matters:

Under the Companies Act 2006, failure to comply with the new IDV requirement is a criminal offence and Companies House has the authority to issue penalty fines. If a director signs a document in their capacity as director when they have not completed IDV, this will also be unlawful (as the legislation states they "must not act as a director of a company"). Although there is a statutory protection for third parties contracting with the company, this may nevertheless lead to concerns about corporate capacity. For instance, under the Directors Disqualification Act 1986 (as amended by ECCTA), there is the ability under the new legislation for an individual director to be removed from office if they fail to comply with IDV. This would, however, require an application to the court. Companies House has indicated that it will initially take a tolerant approach to levying penalties on directors, with stricter measures being levied against repeat offenders, so it is unlikely that we will see any significant number of directors disqualified in the near future, especially during the transition period. However, Companies House may adopt a more robust approach to non-compliance once the transition period ends. Perhaps the more pressing point for some GCs is that non-compliance by directors or LLP members with IDV requirements will render a UK company or LLP unable to file its annual confirmation statement, which itself is an offence.