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Companies House changes let rogue directors off the hook

17 July 2019

Changes to the way Companies House collects data on directors is severely hampering the ability of investigative and business journalists to hold businesses to account and expose frauds and crooks.
 
Directors are no longer required to provide the day of their date of birth or their home address. This information is often vital for journalists when putting together a story and verifying the identity of a company director.
 
The Department for Business, Energy and Industrial Strategy (BEIS) and Companies House are consulting on corporate transparency and register reform and, in her introduction to the consultation, Kelly Tolhurst, minister for small business, consumers and corporate responsibility, said: “Historically the transparency we require of UK corporate bodies is a consequence of those bodies being granted limited liability. In return for agreeing that the owners of a company are only responsible for any debts that company may incur up to the limit of their investment, the state has required disclosure of details about the constitution of a company, people who own it and the people who are responsible for day to day management. Much of this information is publicly available, and free to access online.”
 
The union applauds the fact that all available material is now available for download free of charge from Companies House’s website. For journalists who need to be able to prove that the evidence they have gathered on a rogue director withstands scrutiny, Companies House often makes all the difference.
 
But the changes have proved a retrograde step, hampering journalists in their investigations. As Martin Shipton, the award-winning chief reporter of the Western Mail reported in his newspaper:

“Several months ago, I was unable to satisfy my editor that the director of one company was the same person who was a director of another company. One firm’s Companies House filings included a home address in Wales while another only showed a registered office address in London. Both directors were born in the same month of the same year, but the lack of the day of the month when he was born was considered insufficient to demonstrate that they were one and the same person. Consequently, we did not publish a public interest story which would have been highly topical on a UK level at the time.”

The NUJ is now urging BEIS and Companies House to reverse the changes. Reasons given for limiting the information have included avoiding identity theft, but no evidence has been produced to show this is a problem. Kelly Tolhurst said the UK was recognised as a global leader on corporate transparency. The NUJ said maximum transparency was needed in the data collected by Companies House.
 
The union also supports proposals for a unique verification number/code for directors. This would make identifying a director easier as at present people can enter variations of their name on different company documents – omitting or adding middle names, using diminutives such as “Mike” on occasion and “Michael” elsewhere.
 
Michelle Stanistreet, NUJ general secretary, said:

“Journalists have a job of holding businesses to account. Companies House is a vital part of our democracy and plays an important role in ensuring there is corporate transparency.  Nothing should be done – deliberately or inadvertently – to make it more difficult to access the information it holds, and creeping secrecy should be rolled back. The object must be maximum transparency and easy access to information presented in a meaningful way. Whether as citizens, employees or customers, we need to know that companies are not avoiding or evading tax, ripping us off, acting fraudulently, or borrowing beyond their means. Journalists make it their business to follow the fortunes of companies and root out the rogues. To do this they need accurate data. They need not only to be able to follow the money, but also to do background checks on directors in the knowledge that they cannot mask misdeeds by subterfuge or move on from one disaster to another. Verification of directors’ identities is key to this task.”

Consultation on the BEIS/Companies House corporate transparency and register reform closes on Monday 5 Aug 2019

Tags: , investigative journalism, business journalism, companies house, transparency, beis, Department for Business Energy and Industrial Strategy, Kelly Tolhurst, directors