ID verification for company directors

ID verification for company directors

New legal requirements will take effect from 18 November 2025, requiring both directors and persons with significant control (PSCs) of companies to verify their identities with Companies House. This is part of the Economic Crime and Corporate Transparency Act 2023 (ECCTA), for which the objective is to improve the quality and reliability of data and to end the misuse of company registers.

This article explains how the new requirements will operate, penalties for non-compliance as well as risks and obligations for company directors and recent developments in case law.

For existing directors, compliance and new identification checks will take effect over the 12-month period after 18 November 2025: meaning that all ID must 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, which has been designed to drive compliance.

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.

Failure to complete identity verification 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 between 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.

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 – for example.

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 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.