Are companies now more trouble than they are worth?

Any charity established as a company limited by guarantee should be aware of significant changes to the way they will be regulated by Companies House. The changes are being brought in by the Economic Crime and Corporate Transparency Act 2024 have and will come into force in tranches until 2026.

Essentially, Companies House has become a more proactive regulator, a ‘quasi regulator’ of company law compliance. They have increased powers to query, challenge and reject information. More detail about these and other changes already in force are covered in this blog.

For 2025 the focus is on the introduction of increasingly stringent identity verification procedures (IDV) for Companies House applications and filings. By Spring 2026, any filing to Companies House requires IDV, requiring accounts set up and very strict proof of identity. Companies House has powers to start compliance activity against those who have failed to complete IDV where required to do so.

With Companies House moving to a more ‘active’ regulatory model with expanded role and powers, charities established as companies limited by guarantee may find the alternative structure of the Charitable Incorporated Organisation (CIO) increasingly appealing. The advantage of a CIO being that it has only one set of filing obligations to the Charity Commission (and is not subject to dual regulation by Companies House). Charitable companies of any size have been able to apply to the Commission to convert to a CIO since 1 August 2018 following a relatively straightforward process.  

If you would like to discuss establishing a new CIO or converting your existing charitable company into a CIO, please get in touch with Neil Burton.

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