Posted On / 04.11.2016

Corporate Piracy - Is your Corporate ID At Risk?

Are you a Director or Owner of a company? Could your business be at risk of hijacking by criminals? Corporate ID theft is an increasingly real threat with Companies House reporting 50 to 100 cases monthly.  

The Small Business Enterprise and Employment (SBEE) Act 2015 seeks to improve transparency on ownership and control to mitigate risks and identify criminal activity. Measures introduced by the Act include:  

  • Bearer Shares abolished to deter criminal activity. These shares were owned by whoever held the physical certificate, the issuing firm neither registered owners nor tracked transfers, dividends were paid to the producer of the certificate.  
  • The day of an officer’s date of birth is supressed from newly submitted public records protecting personal identity.  
  • The biggest implementation is the People with Significant Control (PSC) Register. This helps prevent the creation of ‘shadow’ companies often used in money laundering activities by identifying who:  
  1. Owns more than 25% of the company’s shares
  2. Holds more than 25% of the company’s voting rights
  3. Holds the right to appoint or remove the majority of directors
  4. Has the right to, or actually exercises significant influence or control
  5. Holds the right or actually exercises significant control over a trust or company that meets one of the first 4 conditions.

Companies House accepts all forms in good faith. A correctly completed form will be accepted and new information filed at face value. For the cost of paper filing, criminals can change business addresses and request Authentication Codes. Drastic changes can be made, changing officers and altering share capital. Selling business assets, purchases or applications for credit including those that require personal guarantees by an owner or officer of the business could all be initiated.  

A slight variation in business name or address can intentionally confuse in order to deceive others. Alarm bells should ring if bills or invoices for goods and services are received but never requested. Battens advise different registered and operational addresses are used and personal residential address should never appear on public documents if avoidable. Checking for businesses of  similar names or locations, checking junk mail or unrecognised client names can help early detection or avoid being identified as a potential target.  

If unlawful changes are suspected, Directors and Registered Offices are now easier to dispute thanks to the SBEE Act 2015, therefore up to date company documents are vital and all changes should be evidenced by signed Board Minutes to help demonstrate the validity of your company. Without evidence, consent will be removed and a default address issued.  

In addition to this, operated by Companies House is a service called PROOF, a free service which protects companies from unauthorised changes by preventing paper filing of changes to registered office address, changes to officers and confirmation statements.  

PROOF, ensuring your Company Books are up to date and everything is properly evidenced is crucial to help identify corporate identity theft.    

If you need any advice on the areas highlighted above, specifically this relatively new legislation, contact Amanda Goddard on 01935 846225 or amanda.goddard@battens.co.uk

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