James
Brokenshire: I thank the Minister for her comments. My
amendment is intended not to limit scope, but to add clarity and afford
protection to, for example, a vulnerable group being misled by how a
company describes itself, and to allow the Secretary of State to act in
such circumstances. I
hear what the Minister says about significant numbers of people.
Perhaps that underlies my concern about the meaning of a
“significant” number of people. It might mean a
significant number of people covering all sorts of groups from the
young to the very old. It might also mean a particular section of the
public being targeted by a misleading term. I want to be clear about
whether that is covered by the
clause.
Vera
Baird: It is pretty clear that a “section of the
public” will not cease to be part of the public because it has a
particular characteristic. I think that that is the reassurance the
hon. Gentleman
seeks.
James
Brokenshire: I thank the Minister for her intervention.
The amendment has been tabled because “the public” and
“section of the public” are legislative concepts; it
would cover both angles and ensure sufficient protection. It is not
fanciful, and this is a contextual use that has cropped up in other
legislation. I call to mind the securities legislation in which an
offer to “the public” can be made. However, a further
distinction is drawn about what “the public” means. In
that context, it means 50 people, potentially. I seek clarity. I see
that the Minister might have some further
information.
Vera
Baird: I hope that I can help because I agree that that is
an important point. Yes, there can be a difference. In some contexts,
“section of the public” is the right terminology, but the
Bill is clear that the public are harmed if anybody unconnected with
the company is
harmed.
James
Brokenshire: I thank the Minister for her further
clarification on that point. In the light of her additional comments, I
beg to ask leave to withdraw the
amendment. Amendment,
by leave,
withdrawn. Clause
76 ordered to stand part of the Bill.
Clause
77Change
of
name
James
Brokenshire: I beg to move amendmentNo. 142, in
clause 77, page 33, line 35, leave out from ‘78)' to end of line
36.
The
Chairman: With this it will be convenient to discuss the
following: Amendment No. 143, inclause 77, page 33, line 41,
at end insert ‘or section 74
(Appeal from adjudicator's
decision)'. Clause
79 stand
part.
James
Brokenshire: We come to the change of name and the
mechanism by which a company is able to do
that. In essence,
clause 79 provides a new means by which a company can change its name,
rather than by the customary means of a special resolution passed by
the members of the company. I acknowledge that we considered a further
example during our earlier discussions of a slight change in relation
to the ability of directors to change a name where the Secretary of
State has given a direction. That is a fairly narrowly defined
arrangement, which is reflected in the 1985 Act.
The Bill appears to establish
an entirely new mechanism that allows for a company to change its name
in other ways, however. I am concerned that if the mechanism is
allowed, the shareholders—who would normally be notified by
virtue of the fact that their consent would be required through a
special resolution—might be cut out of the process if, for
example, a right existed in a company’s articles of association
for the directors to change the name of the company by board
resolution. Although that would give the company flexibility, it is
important that shareholders should know the name of the company of
which they are shareholders. Such a right, buried deep in a thick pile
of articles, might not be picked up on by members of the company, but I
would want to ensure that their rights were protected.
It is in that context that I
seek the deletion of clause 79 and subsection (1)(b), because of the
clarification needed and the lack of real feel about what the position
of members is or precisely what situations the Government are
contemplating. A very different step change is proposed and, although I
recognise the need for flexibility and deregulation, it is also
important that the interests of shareholders should be maintained and
that they should be properly informed of any changes that might occur
to the company of which they are members. That is the underlying reason
for my amendment, which would delete subsection (1)(b), and my proposal
that clause 79 should not stand part of the
Bill. Amendment No.
143 touches on a slightly different point. It proposes that
companies’ names can be changed by order of the court, under
clause 74, given that the court is given the power to make any order
that the adjudicator might have made on appeal, which could include
requiring a company to change itsname. Amendment No. 143
contemplates that circumstance—it does not block it
off—and would ensure that the issue was properly
addressed.
Vera
Baird: May I deal with amendment No. 143 first? We agree
that it would be better if the relevant clause contained a complete
statement of the various ways in which a company’s registered
name can be changed. I therefore agree to consider
amendmentNo. 143, which is helpful, and we are grateful for
it. Amendment No. 142
would limit how a company could change its name, but the point of the
provisions is to be deregulatory. The amendment would inhibit that
purpose by removing part of subsection (1)(a) and all subsection
(1)(b). Under subsection (1)(a) as drafted, a company will be able to
decide for itself how to change its name. The current
position—under which a special resolution is required, except in
the circumstances that the hon. Gentleman mentioned, but which the Bill
addresses—is unnecessarily regulatory. There is no statutory
control on how a company changes the name under which it trades, so why
do we need controls on how it changes its registered
name? What is
important is that the registered name enables the public to find
whatever information there is about the company on the public record,
and that they are not misled. Other provisions ensure those desired
outcomes, so there is no public need for restrictions on how the
company changes its name. I confess that I struggle to understand the
injustice that would be done to members who would not know that the
name had been changed. I am not sure how realistic that is.
The deregulatory purpose of the
Bill is best served by the clause as drafted. I am sure the hon.
Gentleman agrees that all unnecessary regulation should be removed, so
I hope he will withdraw the
amendment.
James
Brokenshire: I hear what the Minister says about amendment
No. 142, clause 79 and the deregulatory nature of the measure. As I
said in my opening remarks, I am not against that deregulation and the
requirement for flexibility. My concern is to ensure that there are no
unintended consequences and that people are clear about which company
they are a member
of. I listened
carefully to the Minister and I note that she does not necessarily
believe that there is an evil that needs curing. However, this is a
matter that we should keep under review to ensure that no prejudice
arises. I am grateful
to the Minister for her comments on amendment No. 143, which were most
helpful in ensuring that matters are as clear as possible. I beg to ask
leave to withdraw the
amendment. Amendment,
by leave,
withdrawn. Clause
77 ordered to stand part of the
Bill.
Clause
78
Change of name by special
resolution
James
Brokenshire: I beg to move amendment No. 144, in clause
78, page 34, line 4, leave out from beginning to end of line 5 and
insert— ‘(1A)
Where a change of name by special resolution is unconditional, the
requirement of subsection (1) shall be satisfied by forwarding a copy
of the resolution to the registrar.'.
The
Chairman: With this it will be convenient to discuss
amendment No. 145, in clause 78, page 34, line 9, at end
insert ‘and the company shall
forward a copy of the special resolution to the
registrar.'.
James
Brokenshire: The clause provides the detail of what needs
to be filed with the Registrar of Companies in the event of a company
changing its name by special resolution. I note what the Minister said
in the previous debate about the deregulatory approach, but the clause
appears to impose an additional requirement on a company in respect of
the change of name procedures.
A company need only
forward a copy of the resolution, the requisite fee and a revised copy
of its memorandum and articles of association in the event of a change
of name, but the clause seems to require a new formal notice in
addition. I can understand that where the resolution might be
conditional—for example, when a company seeks to be listed on
the stock exchange—a company might wish to change its name
conditional on its shares being admitted to trading. Therefore, the
resolution will not become active, or bite, until that condition is
satisfied. In those circumstances, confusion might be caused with the
Registrar of Companies as to whether the resolution is valid, hence the
probable rationale for including the provision in the
Bill. However, when
there is an unconditional resolution—for example, a simple
proposal for a special resolution that the name of the company be
changed to X Ltd.—I see no need for a formal notice as well as
filing a copy of that resolution, which is the reason for tabling
amendment No.
144. Amendment No.
145, which is consequential, would ensure that in the circumstances of
a conditional resolution, a copy of the resolution was filed, with an
appropriate
notice. The amendments
try to be as deregulatory as possible by not requiring an additional
imposition on companies changing their names where that is not
necessary, while recognising that the Registrar of Companies might be
in difficulties in certain circumstances. Therefore, I understand where
the original thought processes came
from. 2
pm
Vera
Baird: We can only applaud the deregulatory purpose of
amendment No. 144, but the Bill’s provision that the name change
need not be by special resolution has a far greater deregulatory
effect. The scheme of the Bill is to provide a simple system for
notifying the change of name, whether or not it is done by special
resolution. This will mean that changes of name will take effect more
quickly than at
present. Under the
current arrangements, Companies House needs to check every special
resolution to see whether it includes a name change. That causes delays
in processing that might lead to the mischiefs that we discussed this
morning. Last year, 143,286 special and written resolutions were filed,
of which 56,954 involved a change of name. Requiring this document to
be sent in is a useful flag for Companies House showing that the name
is being changed.
Amendment No. 144 would retain
the existing arrangements for name changes by special resolution, which
causes delays in processing because invariably special resolutions
contain far more than just the change of name. It is Companies
House’s experience that having to dig through a morass of other
provisions in the resolution inevitably causes delay.
I hope that the hon. Gentleman
will withdraw his amendment because, on balance, we are even more
deregulatory than he is here, although I can see how at first sight it
does not look that way. AmendmentNo. 145 would put in a
requirement that a special resolution should be filed. I understand
that that is already in clause 29 and the amendment would duplicate
that
requirement.
James
Brokenshire: I find the Minister’s comments on
delay a little surprising in that, under the existing arrangement, it
is entirely possible to do a same-day change of name. I had the dubious
pleasure of having to do that on many occasions before I entered the
House, so I would be delighted if it is possible to do it even quicker
under this regime, but I find that surprising.
I hear what the Minister says
and I look forward to the express, hour-long, pick-it-up-as-you-wait
procedure. It sounds an excellent proposal and I look forward to seeing
that working in practice through the mechanisms of Companies House.
However, given her comments, I beg to ask leave to withdraw the
amendment. Amendment,
by leave,
withdrawn. Clause
78 ordered to stand part of the
Bill. Clauses
79 to 81 ordered to stand part of the
Bill.
Clause
82Requirement
to disclose company name
etc Question
proposed, That the clause stand part ofthe
Bill.
James
Brokenshire: The clause deals with the Secretary of
State’s ability to make provisions by regulation to require
companies to display specified information, to state specified
information in certain documents and communications and to provide
relevant information on request to those they deal with in the course
of their business. To a certain degree, the provisions go further than
the Companies Act 1985 and the Business Names Act 1985 as far as
companies trading under their registered names are concerned. It is
also unclear whether the existing requirements will be added to as a
consequence of the regulations that are referred to in the clause. Will
the Minister therefore provide some guidance on whether additional
requirements not made under existing law and practice will be added to
as a consequence of the clause and the regulations that will be applied
to it? Will the
Minister also clarify the specified information that is to be provided
to persons with whom a company deals? Further to my earlier comments, I
think that there will be a slight extension of the requirements on
companies trading under their
corporate name rather than a trading name. Will she tell us why it was
felt necessary to change the ambit in relation to such
companies? To what
extent will there be further reviews of the regulations? The clause
could be applied in a way that would make the system more regulatory
and bureaucratic. Given the assurances on the deregulatory approach, I
am sure that that is not the intention, but I am concerned that without
some background or clarification on what the regulations are likely to
include—we have not had sight of the regulations—we
cannot look at the clause in much context. We need to know precisely
what is intended and whether any further steps or requirements are
being contemplated. Given the liability set out in clauses 83 and 84
for a failure to make the necessary disclosures, we must ensure that we
do not set difficult or inappropriate targets and requirements on
companies.
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