Essential tips on ID verification for company directors

Paul Brehony, Partner, Signature Litigation. Croner-i

Major changes at Companies House mean all directors have to complete ID verification before registering a company or filing a confirmation statement, explain Abdulali Jiwaji and Paul Brehony, partners at Signature Litigation.

New legal requirements take effect from 18 November 2025, requiring directors and persons with significant control (PSCs) of companies to verify their identities with Companies House. As part of the Economic Crime and Corporate Transparency Act 2023 (ECCTA), the stated objective is to improve the quality and reliability of data and to end the misuse of company registers. However, in a nutshell: fraud prevention is the main driver.

This article examines the backdrop of fraud, how the new requirements will operate, penalties for non-compliance, risks and obligations for company directors, why fiduciary duties are relevant, and recent developments in case law.

Complex frauds are often perpetrated via complex corporate structures, typically comprised of numerous directorships held across multiple entities (and jurisdictions in more complex frauds). Sometimes, Companies House records do not reflect the underlying position of who owns what, and where, and who are the ultimate beneficial owners.

The ECCTA’s new provisions require Companies House to undertake robust identity verification (IDV) of everyone whose details appear on the company register. Company directors and PSCs are therefore subject to a new IDV regime. 

IDV deadlines

For existing directors, compliance and IDV will take effect over the 12-month period after 18 November 2025: their ID must therefore be verified by next autumn.

For new directors appointed after the rules come into force, verification must be completed within 14 days. Existing companies will be unable to file confirmation statements unless every director’s ID has been verified, thus commercial imperatives will drive compliance.

Given their inherent responsibilities, keeping Companies House records up-to-date and properly verified might be seen as a minor bureaucratic hurdle for many company directors. But the verification process is neither intuitive nor straightforward.

Inevitably, circumstances will arise where some directors face problems in trying to complete the verification process. Although authorised corporate service providers can assist professionally managed companies, some individuals who are not committed to their company director role: they may well not verify their ID as required, and might instead choose to resign. 

Penalties for non compliance

Acting as a director without being verified once director duties commence will be a criminal offence. The transitional period provides ample opportunity to comply with the requirements and Companies House has indicated that it will support businesses in compliance and adopt a proportionate approach to enforcement.

Thereafter, failure to complete IDV before the deadline will have consequences. Persistent non-compliance could result in fines, potential disqualification as a director, and/or the company being struck off the register.

Those contemplating a director role must also consider other well-established duties and obligations.

Under the UK’s statutory regime, directors have a range of duties which they owe to the company:

• acting within their powers (ie, their legal authority)

• promoting the company’s success

• exercising independent judgment, reasonable care, skill and diligence

• avoiding conflicts of interest

• not accepting benefits from third parties; and

• declaring interests in proposed or existing transactions or arrangements with the company.

Notably, less distinction is made between the different duties owed by executive and non-executive directors, depending on the precise nature of their role.  The position of company director therefore carries considerable significant responsibility, including fiduciary duties owed to the company for the benefit of its shareholders.

Some of these duties are onerous – as emphasised by recent case law on business diversion cases. Directors must run the company competently and put its interests above their own - shareholders rely on this.

Despite the corporate veil, a company’s directors can be personally liable. For example, the case of Antuzis v DJ Houghton Catching Services Ltd confirmed the principle that directors who enter into contracts in bad faith can be held personally liable. The same can apply in wrongful trading: when directors continue to trade in the knowledge that the company faces insolvency, or has already become insolvent. In doing business with a company, third parties also rely on its directors not to engage in wrongdoing or misconduct, such as fraudulent trading. 

Awareness of legislation and compliance obligations are critical for directors. That applies both to breaches of statutory duty (ie, breaches of Health and Safety legislation) and to Failure to Prevent offences - tax evasion and fraud - which target organisations above a certain size.

Although the legislation does not specifically target individuals, management can still be exposed to related risks, subject to having reasonable preventative procedures. Tax evasion is another potential problem: HMRC can hold directors jointly and severally liable for the company’s tax liabilities, typically when insolvency applies.

Fraud prevention remains a paramount concern for regulators and prosecutors alike. Under the protection of limited liability that benefits corporate structures, there have been numerous examples of serious fraud being perpetrated by company directors and officers. If a company’s integrity is found to be deficient when its records are investigated, those who are culpable may sometimes evade detection and prosecution.

Individuals who hold trusted positions within a company must therefore be vetted, at least at a basic level, in order to mitigate the risk of potential fraud. 

Given the additional compliance obligations, it is likely that the aggregate numbers of companies, directors and PSCs registered at Companies House will see a net reduction over the next 12 months. Equally, more dormant companies will be wound up or struck off, which will ultimately reduce the administrative burden on Companies House. 

Even if those who are determined to perpetrate fraud will find ways to circumvent regulations, the new IDV compliance should help to deter such activity. But one thing is certain: exercising independent judgment, and maintaining reasonable care, skill, and diligence will remain as challenging as ever for directors.