The role of Companies House in governing third sector organisations

Many directors and trustees have grown used to seeing Companies House as a registry rather than a regulator. Professor Andrew Corbett-Nolan sees this as folly; he says Companies House is an important regulator and does valuable work to ensure transparency

In the vibrant ecosystem of the UK's third sector, encompassing as it does charities, social enterprises and other not-for-profits delivering essential public services, governance is often viewed through the lens of specialist regulators like the Charity Commission, the Office for Students (OfS) or the Care Quality Commission (CQC).

These bodies rightly command attention for their focus on charitable objects, educational standards or care quality. However, a critical yet frequently overlooked regulator lurks in the background: Companies House.

At GGi, where we have spent almost 17 years advising boards across public-purpose organisations on robust governance frameworks, we see this oversight time and again. Many third sector entities are structured as companies—typically limited by guarantee—and thus fall squarely under Companies House's purview. Directors and trustees ignoring this can lead to compliance pitfalls, reputational risks and even legal sanctions.

In this article I will explore Companies House's pivotal role in regulating not-for-profits, unpacking the duties and accountabilities it imposes on board members (who are also company directors). Drawing on GGi's extensive experience supporting charities, community interest companies (CICs) and hybrid entities in navigating multi-regulatory landscapes, I will highlight why boards must integrate Companies House obligations into their governance strategies.

With recent reforms under the Economic Crime and Corporate Transparency Act 2023 (ECCTA) amplifying its powers, now is the time for third sector leaders to elevate this ‘forgotten regulator’ in their priorities.

The prevalence of company structures in the third sector

Third sector organisations often adopt company forms for flexibility, limited liability and credibility. The most common is the company limited by guarantee (CLG), where members (often trustees) guarantee a nominal sum (e.g., £1) in case of winding up rather than holding shares. This structure suits charities and social enterprises, allowing them to pursue public benefit without profit distribution to owners.

As of 2025, over 100,000 charities in England and Wales were incorporated as companies, representing about 60% of larger charities with incomes over £500,000. CICs, a subset designed for social enterprises, are also registered and regulated via Companies House, with a dedicated CIC Regulator embedded within it assessing ‘community benefit’.

Yet boards frequently prioritise Charity Commission compliance, such as submitting annual returns or SORP-compliant accounts, while treating Companies House as an administrative afterthought. This dual regulation (or triple, if sector-specific like CQC for care providers) creates complexity. For instance, a charitable company providing health services must align with Charity Commission rules on public benefit, CQC standards on safety and Companies House mandates on transparency. As one Third Sector article notes, this can lead to ‘an awful lot of difficulty’, with some organisations opting for Charitable Incorporated Organisations (CIOs) to escape Companies House altogether, reporting solely to the Charity Commission.

At GGi, our work with public purpose organisations of all kinds reveals that overlooking Companies House often stems from a misconception: viewing it as just a registry rather than a proactive regulator enforcing accountability.

Companies House as regulator

Companies House, an executive agency of the Department for Business and Trade, maintains the UK's public register of over five million companies promoting transparency to support economic growth and combat fraud. For not-for-profits, its role is identical to for-profits: ensuring accurate, timely information disclosure to foster trust among stakeholders, funders, and the public. Unlike the Charity Commission, which focuses on charitable purposes, Companies House enforces the Companies Act 2006, applying universally regardless of profit status.

Recent reforms via the ECCTA 2023 have transformed Companies House from a passive filer to an active gatekeeper. As of 2025, these include mandatory identity verification for all directors (using GOV.UK One Login or authorised agents), stricter checks on company names and addresses to prevent misuse, and enhanced powers to query, reject, or remove inaccurate filings. For third sector boards, this means heightened scrutiny—e.g., verifying identities by March 2025 deadlines—to avoid registration blocks. GGi's collaborations with regulators like the CQC highlight how such changes align with broader transparency drives, yet many not-for-profits lag, risking operational disruptions.

Directors' duties

Board members of company-structured third sector organisations are company directors, bound by the seven statutory duties under section 170-177 of the Companies Act 2006. These duties apply equally to not-for-profits, adapting to their non-shareholder context:

1. Act within powers: Directors must follow the company's constitution (articles of association) and use powers only for proper purposes. For a CLG charity, this means advancing charitable objects, not personal gain.
2. Promote the success of the company: Decisions must benefit members (e.g., achieving social impact), considering long-term consequences, employee interests, community impact, and environmental factors. In third sector terms, this mirrors public benefit requirements but is enforceable via Companies House.
3. Exercise independent judgment: Directors cannot be unduly influenced, even by funders or partner organisations—a key risk in public service delivery.
4. Exercise reasonable care, skill, and diligence: This is judged against a general knowledge standard and the director's specific expertise. For boards overseeing complex services such as education or care, this demands robust training and oversight.
5. Avoid conflicts of interest: Directors must declare interests and avoid situations exploiting company opportunities. In not-for-profits, this includes managing trustee overlaps with other charities.
6. Not accept benefits from third parties: Gifts or perks must be authorised, preventing corruption in grant-funded entities.
7. Declare interest in proposed transactions: Transparency in dealings is mandatory.

These duties are owed to the company, enforceable by members or, in insolvency, creditors. Breaches can lead to disqualification (up to 15 years), personal liability for losses or fines. For third sector boards, GGi advises integrating these into governance charters, ensuring alignment with ethical leadership principles like those in King V.

Filing obligations: transparency as a cornerstone

Companies House mandates timely filings to maintain the public register's integrity. For not-for-profits:

• Annual Confirmation Statement: Confirms details such as directors, PSC, and SIC codes; due within 14 days of the anniversary, with a £34 fee (2025 rates).
• Accounts: Micro-entities (under £632,000 turnover) file abridged accounts; others full accounts, often aligned with Charity SORP. Deadlines: 9 months post-year-end for private companies.
• Event-driven filings: Changes in directors, addresses, or constitution must be reported within 14-28 days.

Non-compliance incurs late filing penalties (up to £1,500 for private companies) and potential striking off, dissolving the company. In third sector contexts, this overlaps with Charity Commission submissions, but dual filing is required—leading some to CIOs for single-regulator simplicity.

Also this year there are new requirements. Identity checks for trustees/directors. From November 2025 all directors must make sure they have completed the Companies House identification checks. This is a staggered process during the implementation year to be done within 14 days of the director’s birthday. A potential £5,000 fine awaits those that do not and the company concerned could end up being struck off.

People with Significant Control (PSC): unmasking influence

Since 2016, companies must maintain a PSC register, reporting those with >25% shares/voting rights, board appointment power, or significant influence. For not-for-profits like CLGs (no shares), PSC often includes trustees or members exerting control. Details (name, DOB, nationality, etc.) must be filed annually or on changes, with verification required.

Failure is a criminal offence, punishable by up to two years' imprisonment or fines. Third sector boards, per GGi's work with CICs, must diligently identify PSCs—e.g., a dominant funder—to avoid scrutiny, especially post-ECCTA enhancements.

Interactions with other regulators

Companies House complements rather than duplicates the work of other regulators. Charitable companies file accounts with both it and the Charity Commission, but discrepancies trigger investigations. For CQC-regulated providers, governance lapses reported to Companies House can inform inspections. OfS-registered universities as companies must ensure director duties align with public interest principles.

Media highlights this as the ‘forgotten regulator’, with ICAEW noting red flags in Companies House data for corruption in not-for-profits. GGi's cross-sector insights—advising the third sector on Charity Commission compliance while ensuring Companies House filings—underscore integrated approaches to avoid silos.

Recent reforms and future implications

ECCTA 2023 bolsters Companies House with ID verification (mandatory for directors by 2025), authorised agents for filings, and powers to challenge inaccuracies. For the third sector, this means enhanced anti-fraud measures, like screening for shell companies masquerading as charities. Boards should audit compliance now, as GGi recommends in our developmental reviews.

Companies House is not just part of the national control bureaucracy. It is an important if often overlooked guardian of transparency enforcing duties that underpin ethical operations. Third sector boards must embrace its requirements alongside others to mitigate risks and build trust. Don't let it be forgotten; make it foundational.

References:

• Companies Act 2006
• Economic Crime and Corporate Transparency Act 2023
• Third Sector articles on dual regulation (behind paywall)