Company Law Reform Bill [HL]

moved Amendment No. A194:"After Clause 705, insert the following new clause—" ““RECTIFICATION OF THE REGISTER WITHOUT COURT ORDER (1)   The Secretary of State may by regulations make provision for the registrar, on application, to remove from the register any material that derives either from anything done without the authority of the company or from something that is forged. (2)   Regulations under this section are subject to the affirmative resolution procedure.”” The noble Lord said: Amendment No. A194 inserts a new clause,"““Rectification of the register without court order””," after Clause 705. This has been raised with us by the Institute of Chartered Accountants in England and Wales. Even given the proposed powers mentioned while speaking to Amendment No. A191, intended to reduce instances of identify theft, we have concerns about the ability of Companies House to correct the register where fraudulent filings have been made. We understand that where Companies House has been informed of such identity thefts, it does not have the power to amend the public record—to remove the fraudulent entry—unless the applicant has made a successful application to court. It does not appear that Companies House will have the right to do so without a court order under this Bill. Clauses 704 to 706 give Companies House powers to correct the register. Clause 704 is an administrative power, enabling the registrar to correct inconsistent filings. Clause 705 gives the registrar the right to remove superseded, out of date or unnecessary material. Clause 706 gives the registrar the right to remove material pursuant to court order. These provisions do not appear to give Companies House the power to remove documents which have been submitted fraudulently, or without the consent of a person to which they relate unless the affected persons apply to court. Naturally, such recourse to court is cumbersome, expensive and time consuming. The amendment would introduce enabling provisions which could be used to introduce a power for the registrar to update the register, where an application is made to Companies House for the removal of fraudulent or unauthorised material. With increasing instances of identity theft, such enabling provisions are important, in that they introduce measures to ensure that the public record is reliable. We accept that any such regulations would need to provide for safeguards and a sufficient level of due process to ensure that documents are not inappropriately removed from the record. For instance, this could be guarded against by inserting a requirement for them to be accompanied by clear evidence, sworn on affidavit, that a document is unauthorised or forged. We further acknowledge that any such mechanisms could leave Companies House as arbiter in disputes between disgruntled directors. Consequently, it is important for there to be a proper parliamentary debate on the balance to be struck in introducing a wholesale power for the registrar to correct unauthorised or fraudulent entries on the register, thus keeping it up to date, and avoiding giving the registrar any discretion; hence our proposal for these regulations to be subject to the affirmative resolution procedure. In order to reduce the likelihood of the registrar becoming embroiled in disputes, the application procedure could include a requirement that the correction is not disputed. For instance, before cleansing the record, the registrar could be required to give companies and other named persons the opportunity to challenge a request for something that relates to them to be struck off the record. If such a challenge is received, a court order could then be required to authorise the removal of the relevant material. Obviously, the argument against such a requirement to notify the parties is that it would alert the perpetrators of the fraud that it has been uncovered. That might hamper law enforcement. However, we believe that this is an important power for Companies House and the registrar to have and, therefore, I beg to move.