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Delegated Legislation Committee Debates

Draft Companies (Particulars of Usual Residential Address) (Confidentiality Orders) Regulations 2002

Second Standing Committee

on Delegated Legislation

Monday 18 March 2002

[Mr. Alan Hurst in the Chair]

Draft Companies

(Particulars of Usual Residential Address) (Confidentiality Orders) Regulations 2002

4.30 pm

The Parliamentary Under-Secretary of State for Trade and Industry (Nigel Griffiths): I beg to move,

    That the Committee has considered the draft Companies (Particulars of Usual Residential Address) (Confidentiality Orders) Regulations 2002.

The Chairman: With this it will be convenient to consider the Companies (Competent Authority) (Fees) Regulations 2002 (S.I., 2002, No. 502), the Limited Liability Partnership (Competent Authority) (Fees) Regulations 2002 (S.I., 2002, No. 503), the draft Limited Liability Partnerships (No. 2) Regulations 2002 and the draft Limited Liability Partnerships (Particulars of Usual Residential Address) (Confidentiality Orders) Regulations 2002.

Nigel Griffiths: The orders set out the detailed provisions behind a change to the law that was supported by both sides of the House when we debated section 45 of the Criminal Justice and Police Act 2001, which received Royal Assent last year. The proposed regulations will apply to England, Wales and Scotland. They will not apply to Northern Ireland, which has its own companies legislation and registry.

At present, the usual residential address of all directors must be filed at Companies House and must be available for public inspection. Section 45 of the Criminal Justice and Police Act 2001 amends the Companies Act 1985 by inserting new sections 723B to F. The amendment allows directors who consider that they are at serious risk of violence or intimidation to apply to the Secretary of State for a confidentiality order. The granting of an order by the Secretary of State will enable directors to file a service address instead of their home address for the public record. A home address will still have to be provided to Companies House, but it will be kept on a separate, secure register to which only competent authorities such as the police and certain other public sector regulators will have a right of access.

The protection given to directors under section 45 also extends to company secretaries and permanent representatives of overseas companies who must supply their home address for the public record. Section 45 will come into force on 2 April 2002, the same date as is proposed for the five sets of regulations.

Having company directors' home addresses on the public record is important for reasons of accountability and transparency and has been a requirement under company law since 1917. However, it has been clear for some time that certain

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activists have tracked down the home addresses of directors of particular companies, such as Huntingdon Life Sciences, and subjected the directors to abuse. Such actions are clearly unacceptable. It was against that background that Parliament agreed to section 45 of the Criminal Justice and Police Act.

Following the Act receiving Royal Assent, the Secretary of State issued a consultative document last October that sought views on draft regulations to implement the detailed provisions of the new regime. We have taken into account the views expressed to us by consultees in framing the revised regulations before the Committee today.

Companies House has needed to implement substantial changes to its systems. It currently operates an entirely open register, and all information filed is available to the general public. Setting up a separate, secure register involved a major departure from that policy. In addition, it has been necessary to discuss and agree with the police their contribution, which will be vital, as in many cases only the police will be able to provide an assessment of the risk of violence or intimidation that directors face.

I now turn to the five sets of regulations before the Committee.

Mr. George Howarth (Knowsley, North and Sefton, East): I understand precisely why my hon. Friend wants the regulations, especially in protecting people in companies such as Huntingdon Life Sciences, of which most people will be aware. However, what protection has an employee in circumstances such as those in a couple of cases in my constituency in which a company ceases trading, owing lots of money, but does not go into administrative receivership? The only avenue open to such people at the moment is to pursue the directors of that company. If unscrupulous directors choose to remove their addresses from the register, no means would be available to workers in such circumstances.

Nigel Griffiths: My hon. Friend refers to directors ''choosing''. Directors will not have that choice. The powers will be exercised by the Secretary of State, following reports from the police and other competent authorities. I hope that I will be able to satisfy the concerns of my hon. Friend as I go through the provisions of these five regulations.

The principal regulations are the Companies (Particulars of Usual Residential Address) (Confidentiality Orders) Regulations 2002. Part I of the regulations describes how an application for a confidentiality order may be made. Companies House has drawn up a form to assist applicants to provide information in sufficient detail to enable the Secretary of State to make a decision on whether to grant a confidentiality order. An application must be accompanied by a fee of £100. The fee is calculated to recover the costs of Companies House in setting up and administering the system. In addition, in many cases the police will be asked to provide a risk assessment and, therefore, the fee includes a contribution to them for their assistance.

The regulations provide that, ultimately, it will be for the Secretary of State to determine whether a

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confidentiality order should be granted, but unsuccessful applicants may appeal to the court against a decision on the grounds that it is unlawful, irrational or unreasonable, or that it,

    ''has been made on the basis of a procedural impropriety or otherwise contravenes the rules of natural justice.''

Part II of the regulations deals with service addresses, and describes when the service address is to be notified to the company, and the criteria for the service address to be valid.

Part III covers the duration, renewal and revocation of a confidentiality order. A confidentiality order will normally last for five years, and may be renewed by application prior to its expiry. It may be revoked where false, misleading or incorrect information has been provided in support of an application.

Part IV deals with access to the confidential record containing the beneficiary of a confidentiality order's home address, together with disclosure provisions. Disclosure is generally prohibited, except to a competent authority.

Part V describes the form and delivery of notices, amendments of enactments, offences and penalties for unauthorised disclosure, and the making of a false statement.

Schedule 1 to the regulations lists the competent authorities, which consist mainly of bodies such as the police, and certain other public sector regulators. Schedule 2 contains the amendments to the Companies Act 1985 that are necessary to effect the measures that are described in the regulations.

Committee members might be pleased to learn that I can outline the affect of the four other regulations more briefly than those of the principle regulations. The Limited Liability Partnerships Act 2000 allows the Secretary of State to apply by regulations any law relating to companies to limited liability partnerships. The Limited Liability Partnership (No. 2) Regulations 2002 apply sections 723B to F of the Companies Act 1985 to limited liability partnerships, with appropriate modifications.

The Limited Liability Partnerships (Particulars of Usual Residential Address) (Confidentiality Orders) Regulations 2002 closely follows the principal regulations, thereby allowing members of limited liability partnerships—who also have to supply their home addresses to Companies House so that they are available for public inspection—to apply for confidentiality orders in the same manner as do directors of companies. However, there are some modifications born out of the fact that, although an LLP is a corporate entity, its internal structure is that of a partnership.

The other two sets of regulations are the Companies (Competent Authority) (Fees) Regulations 2002, and the Limited Liability Partnerships (Competent Authority) (Fees) Regulations 2002. These regulations provide that Companies House may charge competent authorities a fee for accessing the home address of company directors and LLP members. The regulations provide for a one-off registration and validation fee of £50, and an

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individual search fee of £4. Companies House will, of course, incur costs in providing the home addresses of beneficiaries of confidentiality orders to competent authorities. As a trading fund, it is subject to Treasury rules, and, therefore, it is required to recover those costs.

I wish to bring one issue to the Committee's attention. These measures do not extend to removing or expunging existing records at Companies House, and they cannot do so, as there is no power to allow that in the primary legislation. In any case, information on companies—including the usual residential address—is kept in a variety of formats, such as paper, microfiche, electronic image and data format, and the expunging of the particulars of a director's address is not practicable. The information is also supplied frequently, and sometimes daily, to business information providers. Therefore, information about home addresses is already in the public domain. The regulations provide that documents that are filed at Companies House for the public record after an individual has been granted a confidentiality order shall include a service address rather than a home address.


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