Companies House – guidance on new powers to issue financial penalties

Since 2 May 2024 Companies House has had the power to impose civil financial penalties for most offences under the Companies Act 2006. Exercise of this power is an alternative to commencing criminal proceedings in respect of an offence (see our blog post here for more details).

These fining powers were granted to Companies House under the Economic Crime and Corporate Transparency Act 2023 (Financial Penalty) Regulations 2024, made under the Economic Crime and Corporate Transparency Act 2023. The explanatory memorandum to the regulations noted that Companies House would not exercise its new fining powers until it had published guidance on their use. Companies House has now published guidance on its approach to financial penalties, along with guidance on its enforcement policy more broadly.

The guidance on its approach to penalties sets out:

• the process that Companies House will go through where it believes that a relevant offence has been committed, including the issue of a warning notice setting out the grounds for its belief and the steps to be taken to avoid a penalty notice being issued subsequent to a warning notice;
• the timings for responding to warning and penalties notices;
• how Companies House will calculate the appropriate level of penalty to be imposed; and
• how recipients of penalty notices can appeal.

The guidance does not make clear whether Companies House will start exercising this new power immediately, now that the guidance has been published, or whether it will allow time for companies to digest the guidance issued.

For more details on the Economic Crime and Corporate Transparency Act 2023, including on the first significant company law provisions of the Act which came into force on 4 March 2024, see our blog post here.