Company Law Reform Bill [HL]

My Lords, Clause 703 provides that the Secretary of State may make regulations so that a unique identifier can be allocated to anyone who is a director of a company, or a secretary of a public company, or the UK representative of an overseas company. It will help the system for protecting directors’ home addresses and it will prevent third parties confusing different individuals with the same name or being confused by different names being used by a single director. We do not intend that unique identifiers should be allocated to statutory auditors for filing purposes; nor do we believe that it is justified. I listened carefully to the noble Lord’s presentation on this matter. We are aware of the concern that the name of a registered audit firm might be fraudulently added to a company’s accounts. Companies should not claim to have been audited by a particular firm if that is not the case. Such a false statement would be an offence, and we believe that this is a sufficient protection. Unlike in the case of directors’ names, the problem is not one of confusing people with the same name. While there are many John Smiths, different audit firms do not share the same name. So if a company claims that it has been audited by, say, KPMG, it should be fairly easy to demonstrate that it has not without needing a unique identification number. I understand that firms may also be concerned to detect when a company takes their name in vain. This would not require allocation of a unique identification number but, rather, a facility to search on the basis of the audit firm’s name on the register at Companies House. Indeed, if it had a unique identification number and that search facility were available, I suspect that the firm would almost certainly search the number as well as the name, so I do not see that the number adds anything. This could involve considerable expense and we would need to explore whether there was a problem on a scale to justify that expense. In any case, it would certainly not require primary legislation. I appreciate that there is concern about companies falsely claiming to have been audited by certain audit firms but, for the reasons that I have set out, I do not think that allocating unique identifiers to audit firms would do anything to resolve the problem.