New Laws will catch Corporate Pension Trustees

This briefing considers the implications for corporate pension trustees of the Economic Crime and Corporate Transparency Act 2023 ("ECCTA") and the Small Business, Enterprise and Employment Act 2015 ("SBEEA").

1. Verification of Identity under the ECCTA

The ECCTA received Royal Assent on 26 October 2023. It will not take effect for at least a year, because statutory regulations and guidance will need to be in place before that can happen, but it is likely to increase the compliance burden for companies, including corporate pension trustees.

This is legislation which will apply to companies in general, but including corporate pension trustees. The legislation is designed to combat fraud by requiring directors of companies to prove their identity, among other things.

Directors of corporate pension trustees will be required to prove their identity with Companies House by providing photographic identification either directly to Companies House or through registered service providers. Directors of companies which are themselves directors of a company will also be required to prove their identity in the same way.

Those requirements will apply to existing as well as new appointments. Such verification of identity will be an online process. A transitional period, details of which have not yet been published, will apply to the requirement to verify the identity of existing directors.

Directors of companies, including of corporate pension trustees, who breach the requirements to prove their identity will be subject to potential criminal and civil fines and penalties. Such directors may be prohibited from being directors if they breach the verification of identity requirements.

The proof of identity requirements may well be an additional factor deterring people from standing to be, or from remaining as, member-nominated directors of pension trustee companies.

2. Ban on Companies as Company Directors under the SBEEA

Another piece of legislation covers the same area of directorships of corporate pension trustees and of companies in general. In the policy papers accompanying the ECCTA, the Government confirmed that it will implement a ban on companies acting as company directors which is set out in the SBEEA, but which has not yet been brought into force.

This ban could affect professional trustee companies which are appointed as one of the directors of a corporate pension trustee. Professional trustee companies, and other companies, are already prohibited from being the only directors of a corporate pension trustee or other company; companies must have at least one director who is a natural, real person.

Under the SBEEA, it will be a criminal offence to appoint a company to be a company director and such an appointment will be void and of no effect. A 12 months' transitional period (after the SBEEA comes into force) is to apply to companies which are already company directors. Such companies would automatically cease to be company directors at the end of that 12 months' transitional period.

There are to be exceptions to the ban on companies being company directors. However, the scope of those exceptions is currently unclear. The Government policy paper refers to an exception where the company director has "legal personality". This would strictly apply to every company!

Perhaps the exceptions will be designed to capture trading companies or some concept of genuine companies. Potentially, companies may be able to act as company directors if the directors of those companies have verified their identity by providing photographic identification to Companies House.

The likely options for professional corporate pension trustees, once the SBEEA is in force, could potentially be either:

• to rely on an exception to the general ban on companies being company directors;
• to have one or more individual professional trustee directors appointed instead of the professional corporate pension trustee;
• to have 2 corporate pension trustees, comprising the existing corporate pension trustee alongside the professional corporate pension trustee as an additional trustee; or
• to have a sole professional corporate pension trustee as the only trustee of the pension scheme.

3. Registered Email Addresses at Companies House

A further change under the ECCTA, which is expected to come into force earlier than the other changes above, on 4 March 2024, is a new requirement for all companies (including corporate pension trustees) to have a registered email address at Companies House, as well as a registered office address. The registered email address need not be made public on the Companies Register; it will be an email address which Companies House can use to contact companies.

Existing companies are to be required to supply a registered email address to Companies House with their next confirmation statement which falls due after 4 March 2024.