Companies house to carry out extra checks on incorporation applications

It is known that the process of incorporation of a corporate body in the UK is quick and fairly straightforward. However, from 12 December 2018 Companies House will have to carry out extra checks...

It is known that the process of incorporation of a corporate body in the UK is quick and fairly straightforward. However, from 12 December 2018 Companies House will have to carry out extra checks on applications to register corporate bodies to ascertain that they are compliant with the United Nations (UN) financial sanctions.

The UN financial sanctions are imposed on certain individuals and corporate bodies because of the nature of their activities, such as genocide and terrorism (‘designated persons’ or DPs). The consolidated list of all designated persons can be accessed online.

The purpose of the additional checks is to stop DPs using ‘economic resources’ (including companies) for those types of activities. If anyone forms a corporate body with a DP in its corporate structure, it would constitute making an economic resource available. It could potentially also expose Companies House to prosecution due to its role in the registration process.

The Registrar of Companies will now check the details of proposed directors, secretaries, members and people with significant control in all new applications to assess whether or not a designated person is named. This applies to applications to register:

1. UK companies (private, public, limited, unlimited, limited by shares, and limited by guarantee);
2. European companies (SE);
3. limited liability partnerships (LLP); and
4. Scottish limited partnerships (SLP).

If, after carrying out their checks, Companies House believes that the details sufficiently match a designated person, the application will be rejected. The applicant will have an option to re-submit the application with evidence that the person is not a DP. There is guidance on the Companies House website regarding the documents that could support such an application. Following re-submission, Companies House will further consider if the incorporation application can be approved.

At the moment, it is unclear whether the applicants will encounter any delays due to the extra checks.