False or misleading documents or statements

Check before you act

Prior to 4 March 2024, section 1112 of the Companies Act 2006 (“the Act”) stated that it was an offence for a person to ‘knowingly or recklessly’ deliver, or cause to be delivered, a document or make a statement to Companies House that was false, deceptive or misleading in any material particular. This was known as a general false statement offence.

The Economic Crime and Corporate Transparency Act 2023 (“ECCTA”) has amended the general false statement offence and added a new aggravated offence. Additionally, further new offences are anticipated in relation to the provision of misleading, false or deceptive information in connection with the statutory required information to be in included in a company’s register of members.

The new general false statement offence

The general false statement offence no longer includes the requirement of knowledge or recklessness. 

It is now simply an offence for a person to deliver, or cause to be delivered to Companies House, a document or make a statement that is misleading, false or deceptive in any material particular ‘without reasonable excuse’.

According to the explanatory notes to ECCTA, the reasonable excuse element is intended to carve out instances where a company reasonably relies on information provided by others which turns out to be untrue, or where UK professionals have made an honest mistake in assisting companies. How the reasonable excuse component is interpreted in practice remains to be tested.

The offence is punishable by an unlimited fine in England and Wales.

The anticipated basic false statement offence

With effect from a date yet to be appointed, ECCTA will introduce a new basic false statement offence for a person or officer of a company that is in default to make a statement without reasonable excuse that is misleading, false or deceptive in a material particular relating such person’s or company’s (as the case may be) statutory required information to be included in a company’s register of members pursuant to the provisions of a new section 113H of the Act (yet to be implemented).

The anticipated statutory required information

Once implemented, amended section 113(2) and new sections 113A and 113B of the Act will require a company’s register of members to include the following required information:

• in relation to each member who is an individual, such person’s forename and surname and service address;
• in relation to corporate members and firms, such member’s corporate or firm name and service address;
• the date on which the person was registered as a member; and
• where a person ceases to be a member, the date on which the person’s membership ceased.

Such information is in addition to the requirement for companies with a share capital to include details of the number and class of shares held by its members (and if such shares are numbered, their distinguishing numbers) and the amount paid or agreed to be considered as paid on such shares.

The new aggravated false statement offence

ECCTA has also introduced a new aggravated offence under new section 1112A of the Act. An aggravated offence is committed by a person who knowingly delivers to Companies House a document or statement that is misleading, false or deceptive in any material particular. There is no reasonable excuse component for the aggravated offence.

The aggravated offence is punishable by up to two years imprisonment or a fine (or both).

The anticipated additional aggravated offence

With effect from a date yet to be appointed, ECCTA will introduce a new aggravated false statement offence pursuant to the provisions of a new section 113I of the Act (yet to be implemented) in relation to the required information a company is legally obliged to obtain and maintain in respect of its members and former members from time to time in its register of members. Under such provision, an aggravated offence will be committed by:

• any person who becomes a member of a company who knowingly makes a misleading, false or deceptive statement in a material particular in relation to the required information provided by such member pursuant to the provisions of new sections 113A or 113B of the Act for inclusion in the company’s register of members;
• a member of a company who knowingly makes a misleading, false or deceptive statement in a material particular in relation to a change of such person’s required information pursuant to the provisions of new section 113E of the Act for inclusion in the company’s register of members; and
• any member or former member of a company who knowingly makes a misleading, false or deceptive statement in a material particular in relation to such person’s required information pursuant to a notice received from a company pursuant to the provisions of new section 113F of the Act for the purposes of enabling such company to comply with its obligations to maintain its register of members.

Defence

There is a limited defence in new section 1112B of the Act.

If the Secretary of State is satisfied that the conduct amounting to an offence under new sections 1112 (general false statement offence) or 1112A (aggravated false statement offence) of the Act is necessary in the interests of national security or for the prevention or detection of serious crime, the Secretary of State may issue a certificate to the person who would otherwise, without such certificate, be committing a general or aggravated false statement offence under such provisions.

The effect of such certificate is that the person in question would not be liable for the commission of any offence relating to the delivery to Companies House of a document that is false, misleading or deceptive or making a statement to Companies House that is false, misleading or deceptive.

Such certificate may be revoked by the Secretary of State at any time.

‘Serious crime’ is defined as crime (meaning conduct amounting to a criminal offence, or that which would amount to a criminal offence if it took place in any one part of the UK) if it would lead, on conviction, to a maximum prison sentence of three years or more, or if the conduct involves the use of violence, results in substantial financial gain, or is conduct by a large number of persons in pursuit of a common purpose (section 1112B(4) of the Act).

Practical steps

In view of the limited scope of the defence and the anticipated additional offences, companies may wish to take this opportunity to:

• ensure they know who their shareholders are and that they hold up to date information about them on their register of members;
• collate any outstanding information they will need to comply with their obligation to maintain the required information in relation to their shareholders in readiness for the implementation of the new provisions relating to the content of the register of members; and
• review historic filings that have been made at Companies House for accuracy to minimise the risk of future filings being rejected by Companies House for inconsistency.

Please see below links to further articles relating to the reform pursuant to the Economic Crime and Corporate Transparency legislation

Economic Crime and Corporate Transparency Bill

Closing a loophole with the new failure to prevent fraud offence: What you need to know