Company Law Reform Bill [HL]

My Lords, in responding to the noble Lord, Lord Hodgson, perhaps I may say that this is an area of great complexity. We have never claimed to get everything right the first time. It is absolutely essential for us to listen carefully to any amendments coming from any part of this House and to ensure that we have clear and effective answers. If we do not, we will then certainly make amendments. This legislation, which will determine how the, literally, hundreds of thousands of transactions that take place every week are carried out, is of critical importance. It is worth mentioning at the start that Clause 1 relates to the scope of the Companies Acts, and Clause 2 makes clear that by ““Companies Acts”” we mean, among other things, the company law provisions of this Bill. Not every provision of the Bill falls into this category. The part that deals with business names—to which this particular amendment refers—is an example of requirements applying far more widely than to companies alone. They are therefore not a matter of company law in the strictest sense. Another example would be the rules relating to audit in what is now Part 32. The question is how far we should go to indicate what regulatory requirements will apply to overseas companies. Our approach in this clause, which is essentially about the scope of company law, properly so-called, is to indicate the core company law requirements that apply to overseas companies; in other words, those appearing in, or applied to by, Part 25 of this Bill. This is what subsection (3) does: it does not attempt to provide an exhaustive list of, or a pointer to, all the regulatory requirements, whether company law or not, which may apply to overseas companies. There could be any number of such requirements, relating to tax, employment, consumer matters, and so on. The rules relating to business names are of this sort, and the clause as currently drafted does therefore not refer to them. I am confident that this is the right approach. First, I do not believe it would be possible to provide an exhaustive list of non-company law regulatory requirements. To include some but not others, as the amendment proposes, might be misleading and unhelpful to users. Secondly, I am concerned that if we were to indicate expressly that the provisions on business names applied to overseas companies, we might be taken as implying that they were not relevant to other companies, including unregistered companies, mentioned in subsection (2) of this clause. This risks giving a false impression. I should also mention that the noble Lord’s amendment should probably refer to Part 31, rather than Part 32. As the noble Lord will remember, what was Part 31 of the Bill in Committee has now been removed and the numbering of the Bill has therefore been changed. The noble Lord should be forgiven for failing to reflect this change, as he is not alone in so doing. I confess that a change of this sort will be needed to Clause 2 when the Bill is next printed. I hope the noble Lord will understand that, whatever the correct reference in the amendment should be, we do not think it would be sensible to accept it as a matter of principle, for the reasons I have outlined. I hope the noble Lord will agree to withdraw it. In turning to Amendment No. 2, I should like to address separately the two aspects of this amendment: the deletion of the existing text and the insertion of the alternative text. The proposed insertion, while making clear that the registered office must be in the UK, would duplicate the requirement in subsection (5) of Clause 9 for the address of the registered office. The proposed deletion would remove the requirement for the company to specify within which UK jurisdiction its registered office is situated. Perhaps I should emphasise that the registration requirements will continue to be the same throughout the United Kingdom. Nevertheless, as I hope I can show, it is important to know where it is registered. We covered much of this territory in our debates in Grand Committee. We continue to consider that it is important to know within which UK jurisdiction a company’s registered office is situated, and then to restrict where that office may actually be situated to that jurisdiction. There may come a time when such restrictions can be removed, but this will require making satisfactory provision where this matters. It is true that the location of a registered office within the UK has little or no effect on the application of most company law. However, it impacts on important matters relating to companies. For example, under the current legislative scheme, whether the registered office is in Scotland, Northern Ireland, or England and Wales, determines which rules apply for the registration of charges granted by the company. Furthermore, the jurisdiction of registration matters in the event of a company’s insolvency. I can assure noble Lords that the registration requirements will continue to be the same throughout the Unites Kingdom. Amendment No. 9 is wholly consequential to Amendment No. 2. In view of this explanation, I hope noble Lords will not press these amendments.