Corporate Law Update: 28 June - 4 July 2025

04 July 2025

This week:

Government extends ID verification requirements to LLPs, unregistered companies and overseas companies

Regulations have been made to extend the identity verification (IDV) regime to further types of legal entity, namely limited liability partnerships (LLPs), overseas companies and unregistered companies.

The Economic Crime and Corporate Transparency Act 2023 introduces new requirements for directors and persons with significant control (PSCs) of UK companies to verify their identity. Failure to do so will be a criminal offence, and a director who has not completed IDV will not be able to act as such.

The new requirements are scheduled to come into force in Autumn 2025. However, since April, individuals have been able to verify their identity on a voluntary basis, either directly with Companies House or indirectly with an authorised corporate service provider (ACSP).

The new regulations applying IDV to LLPs are currently in draft and we await the final form.

The regulations applying IDV to overseas companies and unregistered companies have been made and will come into effect when the corresponding requirements for companies come into force.

We have set out the key points below.

Limited liability partnerships

  • A new member of an LLP (whether an individual or a legal entity) will not be permitted to act as such until their admission has been notified to Companies House. If they do so, they will commit and offence. This applies whether the new member is an individual or a legal entity, and it effectively mirrors the same restrictions for company directors.
  • Each member of an LLP who is an individual will be required to verify their identity. An individual will not be permitted to act as a member of an LLP unless they have completed IDV. If an individual who is not verified acts as member of an LLP, both they and the LLP will commit a criminal offence, as will any other member of the LLP who is “in default”.

Existing members of LLPs who are individuals will need to verify their identity before the date of the LLP’s first confirmation statement due after the mandatory requirements come into effect.

Again, this mirrors the new IDV restrictions for company directors, namely that an individual who has not completed IDV is not permitted to act as a director.

The new IDV requirements apply only to LLP members who are individuals. They do not apply to LLP members that are legal entities. However, the Government has previously signalled its intention to implement a prohibition on corporate LLP members, with exceptions. We await the detail of this and the extent to which it will intersect with IDV.

  • The new restrictions on LLP members raise an important question, namely what is meant by “acting as a member” of an LLP. We can assume this means that the member in question cannot represent the LLP in discussions with third parties or bind it to legal commitments. What is less certain is whether the member can participate in internal management decisions (akin to a director), or even vote on fundamental matters or receive profits (akin to a shareholder).
  • Each new PSC of an LLP who is an individual will need to complete IDV if required to do so by Companies House. Failure to do so will be a criminal offence. Existing individual PSCs of an LLP will need to complete IDV by a date to be specified. This mirrors the position for companies.

Overseas companies

  • A company incorporated outside the UK is required to register with Companies House if it opens a UK establishment. Under the regulations, directors of registered overseas companies who are individuals will be required to complete IDV. Until they do so, they may not act as a director of the company while in the UK. (There is no restriction on acting outside the UK.) If they do so, both they and the company will commit an offence, as will every other officer or agent of the company who is “in default”.
  • Similarly, an individual who is appointed as director of a registered overseas company will not be permitted to act as such while in the UK until their appointment is notified to Companies House. If they do so, they will commit an offence.
  • Existing directors of registered overseas companies will need to verify their identity before the first anniversary of the opening of the company’s UK establishment that occurs after the mandatory requirements come into effect.

These changes do not affect a company that is required to register on the UK’s Register of Overseas Entities, which is a separate regime (unless the company is also required to register because it has a UK establishment).

Unregistered companies

This is a residual category that includes certain companies formed by Royal Charter and certain Acts of Parliament. The regulations extend the IDV regime to directors and PSCs of unregistered companies who are individuals in the same way as for companies and LLPs.

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

Access the Companies Authorised to Register, Unregistered Companies and Overseas Companies (Application of Company Law) Regulations 2025 (SI 2025/761)

New legislation would put the environment and employees at the heart of directors’ duties

Legislation has been introduced into the UK Parliament which, if enacted, would require company directors to place much greater emphasis on employees and the environment when discharging their duties.

Currently, all UK company directors are under a duty – set out in section 172 of the Companies Act 2006 – to promote the success of their company for the benefit of its members (normally, shareholders) as a whole.

In discharging this duty, directors are required to “have regard” to certain matters. These matters include the interests of the company’s employees and the impact of the company's operations on the community and the environment. (Other factors include the need to foster the company's business relationships with suppliers and customers, the desirability of maintaining a reputation for high standards of business conduct.)

However, these matters do not trump the overriding duty to benefit the company’s members, and directors are free to take a course of action that is adverse to employees or the environment if that decision is ultimately for the benefit of shareholders.

The Company Directors (Duties) Bill would amend this to place a company’s employees and the environment on an equal footing with its members. It would also place a positive duty on directors to “seek to reduce (so far as is reasonably practicable) harms the company creates to the environment”.

The legislation has been introduced as a Private Members’ Bill. This means it lacks Government backing and so is unlikely to become law.

However, the Bill is the latest in a series of attempts to reorient the primary focus of company directors towards the environment and society more generally.

Perhaps the most well-known example of this is the so-called “Better Business Act”, another proposal to amend section 172 which would require directors to manage a company to benefit its members, whilst operating in a manner that “benefits wider society and the environment” and “reduces the harms the company creates or costs” on society and the environment.

You can hear more about the Better Business Act in our previous podcast.

Read the Company Directors (Duties) Bill (opens PDF)

Takeover Panel publishes new guidance on unlisted share alternatives and profit forecasts

The Takeover Panel has published a new Practice Statement 35.

The new statement describes the way in which the Panel Executive will normally interpret and apply certain aspects of the Takeover Code in relation to a profit forecast or quantified financial benefits statement published by an offeree company or a securities exchange offeror, as well as investment research published by a connected firm. In effect, the statement codifies existing practice.

Separately, the Panel has published a new Practise Statement 36, which provides important guidance on how to structure an unlisted share alternative to comply with the Takeover Code.

An unlisted share alternative typically involves the issue of shares or other securities in a corporate “Bidco” owned by the bidder. This is a common feature of UK public takeovers which allows bidders to bridge valuation gaps and enables shareholders to retain on-going exposure to the target company.

Importantly, an unlisted alternative also gives a bidder flexibility where Takeover Code restrictions on special deals apply or where “joint offeror” status is not available.

You can read more about Takeover Panel Practice Statement 36 on unlisted share alternatives in our separate piece.

Alongside these new statements, the Panel’s Code Committee has published a consultation (PCP 2025/1) on dual class share structures, IPOs and buy-backs. We will report on this next week.

Access Takeover Panel Practice Statement 35 on profit forecasts, quantified financial benefits statements and investment research

Access Takeover Panel Practice Statement 36 on unlisted share alternatives

Access Takeover Panel Consultation PCP 2025/1 on dual class share structures, IPOs and buy-backs (opens PDF)