Limited Liability Partnerships (Application and Modification of Company Law) Regulations 2025

Lord Leong Excerpts

Wednesday 10th September 2025 Grand Committee

Moved by

[Lord Leong]

That the Grand Committee do consider the Limited Liability Partnerships (Application and Modification of Company Law) Regulations 2025.

[Lord in Waiting/Government Whip (Lord Leong) (Lab)]

My Lords, in speaking to these amendments I will also speak to the Economic Crime and Corporate Transparency Act 2023 (Consequential, Incidental and Miscellaneous Provisions) Regulations 2025 and the Register of People with Significant Control (Amendment) Regulations 2025.

These instruments form part of the Government’s secondary legislation programme to implement the Economic Crime and Corporate Transparency Act 2023, which I will refer to as the 2023 Act. The 2023 Act delivers the most significant reform to Companies House in over 180 years. It is central to the Government’s efforts to combat economic crime, improve corporate transparency and increase trust in the UK’s business environment. Since the 2023 Act, Companies House has made great progress in implementing the reforms, including removing false and misleading data. For example, from 4 March 2024 to 31 July 2025, Companies House removed something like 113,300 registered office addresses, 88,000 officer addresses and 71,000 PSC addresses.

In April this year, Companies House launched its identity verification service. Hundreds of thousands of individuals have successfully verified their identities. This is a major milestone and ensures that customers and Companies House are ready for mandatory identity verification in November this year, a central pillar of our reforms. These regulations will support the delivery of identity verification, as well as other technical reforms relating to the people with significant control—PSC—framework.

I will briefly speak to each instrument in turn. The Limited Liability Partnerships (Application and Modification of Company Law) Regulations 2025 apply many of the reforms to companies contained in the 2023 Act to limited liability partnerships, also known as LLPs. Specifically, they introduce identity verification for LLP members and PSCs, prohibit disqualified directors from acting as an LLP member, and remove the requirement for LLPs to keep their own “local” registers of members and PSCs. Extending company reforms to LLPs will align requirements across corporate entities. This will reduce opportunities for misuse by criminals and ensure that LLPs, and those doing business with LLPs, benefit from a more transparent and reliable business environment.

The Economic Crime and Corporate Transparency Act 2023 (Consequential, Incidental and Miscellaneous Provisions) Regulations 2025 is a largely technical instrument that helps to underpin the smooth implementation of key elements of the 2023 Act. It makes necessary consequential amendments to primary and secondary legislation following the removal of the requirement for companies and other entities to retain their own local registers of directors, secretaries and PSCs. Instead, there will be one central register at Companies House. This will make life easier for users of the register, as they will know that the centralised register held by Companies House is the definitive version.

The instrument also introduces provision to support the rollout of identity verification through the mandation of unique identifiers. These codes are generated for each verified individual and will be used to prove an individual’s verified identity status. Without this instrument, crucial parts of the Companies House reform package would not be able to operate as needed. This instrument ensures consistency across the legislative framework and prevents references to repealed provisions from persisting in law.

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We on these Benches support these measures and hope that the Minister will provide the further clarification that I have asked for, particularly around the definitions and the practical guidance for small businesses navigating these various measures.

[Lord Leong (Lab)]

My Lords, I thank all noble Lords who contributed to this short debate: my noble friend Lord Sikka, and the noble Lords, Lord Vaux and Lord Sharpe. These regulations are another step in the delivery of the Companies House reform programme and are critical in ensuring that it operates effectively. So I really do thank all noble Lords for their questions. I will respond to as many as possible and I will check Hansard to see whether I have answered all of them. If I have not, I will obviously write to noble Lords.

I will address my noble friend Lord Sikka’s forensic look at fake banks, late filing offences and all that. I will try to answer as many of his questions as possible. Regarding fake banks and fake filing offences, Companies House has new powers to query and remove false information. As I said earlier, from March 2024 to June 2025 it prevented some 14,000 suspicious filings. The regulation of banks is for the Financial Conduct Authority, as the noble Lord knows. Companies House has implemented checks on incorporation to prevent companies forming where they do not have regulatory approval to operate as a bank. It continues to work with the FCA on this issue. The filing of false information with Companies House is a serious criminal offence, and those who have done so will have the full weight of the law thrown at them. There is a basic offence of filing without reasonable excuse and an aggravated offence of filing knowingly, so it is a very serious thing.

My noble friend Lord Sikka asked about overseas persons and whether there are any identification checks. Companies House will be able to perform robust ID checks on overseas individuals via the Government’s One Login system, which is now operating. If noble Lords have not had a chance to look at it, I encourage them to do so. Before I was in government, I personally managed to get a One Login set up—it is very easy to register and does not take more than 10 minutes to verify yourself.

If an individual cannot verify their identity, they will not be able to incorporate a company or act as a director. Existing companies will be unable to file a confirmation statement, and this will lead to a strike-off. From November, all filings will have to have verification, and this will be rolled out over the next few months to ensure that, for every single confirmation filing, the people filing it will be verified. They can either do it themselves or they can do it via the ACSP.

I thank the noble Lord, Lord Vaux, for his question and his contribution, during the passage of the Act, on nominee shareholders. I will go through our position as far as they are concerned. The Government are aware of the misuse of nominee arrangements, including to avoid disclosure under the people with significant control regime. Work is ongoing with stakeholders to determine the scale of this issue, and the ECCTA provides the power to make regulations to enable a company to find out who its PSCs are in cases where shares are held by a nominee. The Government are wary of imposing disproportionate burdens on legitimate businesses and investors. So, before making any regulations, it is right that the Government work with relevant stakeholders to ensure that burdens can be targeted effectively. In the meantime, the Companies House intelligence hub will use data science to identify threats of economic crime on the register, including the threat posed by agents facilitating the criminal activity of others. Companies House will make this intelligence available to partners such as law enforcement and supervisory bodies.

In 2024-25, the average number of shareholders per company was something like 2.1 shareholders per company, and the average number of PSCs per company is something close to about 1.2, so it is actually quite small. But we still need to get to the bottom of this to see how widely it is misused. This is in line with expectations as the vast majority of companies are law-abiding SMEs.

My officials have been in touch with other countries to learn from their experience in the nominee shareholders’ space. Among others, this includes Singapore. In Singapore, companies are required to keep a register of their nominee shareholders containing the particulars of all their nominators. My officials will continue this engagement as they work better to understand the scale of the issue, as I said earlier, and the cost and benefits of the new nominee shareholders requirement. It is important to this Government that any reforms are proportionate and workable.

On the point made by the noble Lord, Lord Sharpe, about acting as a member of an LLP, the offence of acting as a member without being verified is explicitly defined. If one individual performs the functions of a member—that is, a director—or actions that relate to the running of an LLP, they are likely to be acting as a member. So IDV will apply to both members who subscribed their names to incorporation documents equivalent to the director of a limited company and ordinary members with lesser responsibilities, usually set out in LLP’s own members’ agreement. Obviously I will speak to officials, and if my answer to the noble Lord’s question is still not detailed, I will ensure that a letter will be sent to him.

On the point about limited partnerships, which I think the noble Lord asked about, Companies House is currently looking at it. Correct me if I am wrong, but I think there are something like 60,000 limited partnerships on record, and Companies House is trying to clean this up to see how many of these limited partnerships are still active. So, over the next few months, it will clean it up, and those that have not filed confirmation statements and all that will be written off. We recognise that there is a need for limited partnerships in respect of investment trusts, private equity, and so on, so we need to ensure that they are properly regulated as well.

Regarding identity and corporate LLP members, the Government will be reviewing which individuals will be required to identify where a position is held by a corporate entity and not an individual. So we are working on that, and I hope we will be able to inform the House when it is done.

I want to conclude by reminding Peers of the importance of these reforms. These regulations are necessary to make the UK a safer and more transparent place to do business. I commend these measures to the House.

Motion agreed.