Energy Sector: are you prepared for Companies House’s enhanced powers?

As we trailed in our article UK Government improves transparency over corporate entities: 3 key changes that will affect your company, the Economic Crime and Corporate Transparency Act 2023 ("ECCTA") aims to tackle fraud and money laundering. The first set of powers for Companies House are expected to come into force on 4 March 2024. However, it is important to note that secondary legislation is still required for these powers and therefore the date on which they take effect may change.

Companies House's enhanced powers include:

• Greater powers to query information and request supporting evidence.
• Stronger checks on company names.
• The ability to annotate the register when information appears confusing or misleading.
• Taking steps to clean up the register, using data matching to identify and remove inaccurate information.
• Sharing data with other government departments and law enforcement agencies.

Additionally, each company will be required to implement the following:

• An appropriate registered office address that is accessed regularly by an appropriate individual(s).
• Supply Companies House with a registered email address.
• On incorporation provide confirmation that they are forming the company for a lawful purpose and on confirmation statements to confirm its intended future activities will be lawful.

These powers are of particular relevance for energy companies in relation to their SPVs and the wider portfolio. Below we have laid out some of the key considerations you should be making:

New rules for a registered address

A company's registered address must now be an 'appropriate address', one whereby:

• Any documents sent to the registered office should be expected to come to the attention of a person acting on behalf of the company (i.e., a director, employee or agent acting on behalf of the company).
• Any documents sent to that address can be recorded by an acknowledgement of delivery.

A registered address can no longer be a PO Box. However, it will still be possible to use a third party agent address as a registered office address, provided it is an 'appropriate address'. Companies House may change an address to a Companies House default address whilst it awaits confirmation of an 'appropriate' address. A company will have 28 days to confirm (and provide supporting evidence) the details of an 'appropriate' address otherwise Companies House will commence the process to strike off the company.

The potential issue for an energy company with a large portfolio is in identifying SPVs/project companies within the portfolio to check that they each have an 'appropriate address'. This is especially relevant to those SPVs where the potential project has either stalled, has been delayed indefinitely, or has failed altogether. Such SPVs will need to comply with the requirements under ECCTA at all times; just because they are no longer 'operating', does not mean they fall outside the scope of ECCTA.

New registered email address

This requirement is very similar to the above in that it must be an 'appropriate email address'; however, it is important to note that the email address will not appear on the public register. This must be provided as part of a company's next confirmation statement. If one is not provided, then the company will be committing an offence.

The potential issues here is who the registered email address goes to within the portfolio. Consider what happens if that person leaves the business and the inbox for that email address is no longer monitored, or the project the relevant SPV is overseeing is delayed or fails. As a matter of best practice, we recommend using an email address that is accessible by more than one person and on a change of personnel, ensure adequate handover for the responsibility of managing communications to and from the email address. 

If the SPVs do not maintain an appropriate registered office address and email address, the company and every officer will be committing a criminal offence, which is punishable by a fine.

Lawful purpose statement

When incorporating a new SPV, the shareholders will need to confirm that the company is being created for a lawful purpose. Existing companies will confirm that the company's intended future activities are lawful in their next confirmation statement. Companies House will not accept documents if the statement has not been confirmed.

This statement will need to be made for dormant companies and for companies that are not trading (but are not dissolved). As noted above, this is particularly relevant for SPVs which may fall off the radar where a project has failed and the energy company is no longer progressing that project. It is important to remember that they are also captured by this regime.

Our thoughts

These changes will bring with them a lot of administration challenges for energy companies with large portfolios. It is important that a company secretarial function and/or portfolio review is implemented to keep track of all the SPV/project companies within a portfolio and those SPVs/project companies that have fallen by the wayside are not neglected. Keeping a schedule to regularly review the SPVs and winding up any that are no longer required will ensure that the energy company is not accidentally caught out for breaching the requirements of ECCTA.

If you have any questions on ECCTA and the implications of it or are interested in a company secretarial service please contact our Corporate Governance team.

For further information on ECCTA, please see our other articles that cover ECCTA.