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

Lord Sikka Excerpts

Wednesday 10th September 2025 Grand Committee

These regulations are necessary to make the UK a safer and more transparent place to do business and I hope they will be welcomed.

[Lord Sikka (Lab)]

My Lords, I congratulate the Minister on retaining his position after the recent reshuffle of the Cabinet.

Despite recent reforms of Companies House, several issues remain unaddressed and the legislation in front of us does not really deal with them. I will illustrate my concerns with three pieces of empirical evidence. I can do more, but I do not have time.

The first concern is exemplified by a company called Herran Finance plc, which is company number 12370122 at Companies House. It was incorporated on 18 December 2019, with issued share capital, so its accounts claim, of £59,892,205. Its purpose is to provide financial services. This is a dormant company. It has never traded. The rudimentary accounts filed at Companies House show that it had cash in hand and at bank on 31 December of—guess what—£59,892,205. Amazingly, exactly the same amount was held a year later when the accounts for the following year were filed on 12 August 2022.

The company is engaged in banking, though it does not have the word “bank” in its name, which, as we know, is reserved for certain types of organisations. Its name does not appear on the FCA list of authorised firms. None of its directors is on the FCA list of authorised individuals. No person of significant control statement could be found at Companies House. The company’s page at Companies House noted on 10 October 2023:

“Compulsory strike-off action has been suspended”.


There has been no update since then. That is, nearly two years have elapsed.

This is a fake company that may have duped people. It actually has a website and its address is herran.co.uk, which has all the hallmarks of a scam. It describes itself as

“the 10th oldest bank in the country”

and says that deposits with it are safe because they are insured with the Federal Deposit Insurance Corporation —yes, a UK-based bank covered by US depositor protection. If anyone needed a sign of fraud, there it is. The website is an exact clone of a genuine bank.

Some five years after the incorporation of this organisation, no attempt has been made by Companies House to see that the accounts are genuine or that the company is licensed to carry out the described activities. Can the Minister explain who checks whether a fake bank has been incorporated at Companies House and how often these checks are made? Who are they reported to?

Directors of Herran provide a UK address but do not appear to live there. Companies House does not require proof of address when you first create a company. Anybody’s address can be used and, paradoxically, the injured party must provide evidence of the proof of address to correct data held at Companies House—but crooks do not have to. Can the Minister explain why no authentic proof of address is needed to register a company at Companies House?

Does the Minister agree that the filing of false information at Companies House should be a criminal offence? Why is that not already the case? What is the Government’s plan to deal with this? We have a lot of debates around immigration, but fake companies can be used to secure work visas. Can the Minister tell the House how many work visas have been secured by false companies? How do the Government know how many have been issued? Is there any check at any time? That is my first piece of evidence.

My second piece of evidence is that numerous fake banks are routinely registered at Companies House. Examples include “CITIC Limited”, “The Toronto Dominion Ltd”, “JPMorgan Chase Ltd” and “Goldman Sachs Finance Ltd”, and all these had a common director: a person named Barbarat Giuseppee, who claims to be an Italian living in France. The address given is probably non-existent, and the person probably does not exist either. The same Giuseppee currently holds seven company directorships according to Companies House. Yet nobody has bothered or cross-checked; nobody seems to be doing any job in tackling the crooks.

No amount of identity verification can confirm that a foreign national forming a UK company is genuine, as the UK does not have access to the passport or birth certificate databases of other countries. Even if a genuine foreign national is caught in illicit practices, UK law cannot be enforced on any person living in another country. Around 900,000 UK-registered companies do not have a UK director. Evidence shows that a company with only foreign directors is 17 times more likely to show signs of fraud, yet nobody has bothered to deal with this particular problem.

Genuine companies are not informed by Companies House or anybody else of the existence of fake companies abusing their name. As and when they discover this, they are left to incur legal costs out of their own pocket to fight fraudsters. Can the Minister explain why Companies House registers blatantly fake companies? Does he agree that we need a law requiring all UK-registered companies to have at least one UK citizen as a director? That way, at least we would know whom exactly to hold to account.

My third piece of evidence relates to a law firm that was shut down in October 2023. The name of the firm is Axiom Ince Ltd and it was closed by the Solicitors Regulation Authority. Some £64 million of clients’ money was missing. Unaudited accounts for the year to 31 March 2022 were filed at Companies House on 7 February 2023. They were not audited because directors claimed that the company was a small company. It was not, because it did not satisfy the requirements of the Companies Act definition.

An accountancy firm named Adrian C Mansbridge & Co. issued an accountants’ report and went along with the directors’ fiction—for a fee, of course. Subsequently, the Institute of Chartered Accountants in England and Wales fined the firm the puny sum of £2,100 and recovered the disciplinary costs of £2,200. The ICAEW keeps the fines to swell its coffers. The whole thing is a racket. Accountancy trade associations make money by licensing accountants and auditors and then profit again from their misdemeanours.

Companies House never checks accounts to see whether any of the audit exemptions claimed are appropriate. Can the Minister explain who checks to ensure that the accounting and auditing exemption requirements are not abused? He cannot say that it is up to the directors, because they are party to the wrongdoing, and he cannot say it is up to the auditors and accountants, because they are party to the wrongdoing as well.

So, currently, there is no central enforcer of company law, and the deregulatory zeal in political circles at the moment is unlikely to deliver the required transparency or freedom regarding economic crime, which is what the Minister said the legislation in front of us will deliver. I look forward to his response.

[Lord Vaux of Harrowden (CB)]

My Lords, I thank the Minister for introducing these regulations. It is good to hear from him on the progress Companies House is making in cleaning up the register and the process of verification, although, as the noble Lord, Lord Sikka, has just demonstrated so clearly, it is a work in progress.

The Register of People with Significant Control (Amendment) Regulations 2025 are fine so far as they go, but they still leave it far too easy for persons with significant control to disguise themselves and, therefore, not be disclosed on the register as they should be. We discussed this loophole at some length during the passing of what the noble Lord called the 2023 Act. It relates to the use of undisclosed nominee share- holders.

During the process of passing the Act, this House passed an amendment on Report that would have required shareholders holding 5% or more to declare whether they are holding those shares on behalf of another person. That amendment was ultimately dropped during ping-pong after a compromise was reached with the then Government that inserted into the Bill a power for the Secretary of State to regulate to strengthen the rules around nominees’ shareholdings.

A PSC has an obligation to state that they are a PSC, but a dishonest actor would not do so. The problem we have is that the onus on reporting PSCs falls to the company, and the obligations on the company under the statutory guidance are quite weak. The statutory guidance says that the company should simply scan its share register and identify any shareholders who hold 25% or more. It is easy therefore for a PSC who wishes to hide their identity to structure their holdings via a number of shareholdings below that 25% threshold. For example, five holdings at 20% would give 100% control.

All the dishonest actor has to do to hide that control is find five willing people who are prepared to have their name on the shareholder register and hold shares on behalf of the dishonest actor as nominees. There is no comeback for those nominees. They have no obligation to disclose the nominee arrangement unless the company actively asks them to, which it does not have to do if the shareholding is below 25%. So the company could quite legitimately say that it had followed the guidelines and state that it does not have a PSC because it could not see any shareholders above the 25% threshold.

A whole industry of nominee companies has grown up, as you can see if you google “nominee shareholders”. If the Minister has not done that, I urge him to take a look. Although there are perfectly reasonable uses for nominee shareholdings, it is fair to say that most of the nominee companies make it pretty clear on their websites that the primary purpose is simply to hide the beneficial ownership of the shareholding, which they will do for just £200 a year. Very few of them point out the PSC rules. Forcing those nominees to lie on the record to hide the identity of the beneficial owner would, at the very least, concentrate their minds and make it much harder for a dishonest PSC to find nominees prepared to hide their identity.

My questions for the Minister are as follows. What analysis have the Government done on this since the Act was passed? Does he recognise the issue? Is there any plan to use the powers that were inserted into the Act during ping-pong to deal with it?