My Lords, I declare my interests as set out in the register.
At Second Reading, I expressed some unhappiness and concern about the compulsory public register provisions. One of my main objections is to the inclusion of, and the impact on, small companies. Generally, I think that it is a wonderful thing that this country has had an explosion in entrepreneurship over the past five years, the likes of which I have not seen in my lifetime, with lots of young people happily getting on with setting up their own businesses—and, as I have said before, that is not just confined to London and the south-east. One of several reasons for that is that, compared to other countries, the Government have made it relatively easy to set up your own business: forming a company is extremely easy; the nature of the financial accounting returns has been made simpler for small businesses; and, whereas there are major hurdles in setting up a new SME in, for example, Italy, in this country it is pretty straightforward. That has been a huge success.
Prima facie, I am not happy with additional regulatory burdens, particularly on small businesses, unless they add some clear advantage. Here I cannot see that a small business, as defined in the Companies Act 2006, will have the resources to be engaged in terrorist funding, nor do I see much prospect for at least material avoidance or for a security risk. Therefore, my Amendment 37A calls for the exclusion of small companies as defined in the Companies Act from the application of compulsory public registers. One of my concerns is that there are huge numbers of new small companies—1 million last year, I think, and nearly 2 million over the past two and a half years—and they are almost invariably run and controlled by the
entrepreneur who set them up, so he will almost certainly fall into the category of having control through owning 25% or more of the company. I think it extremely unlikely that small businesses will know about this legislation, as it is pretty unlikely that they will be employing lawyers who could warn them about it, so I also see the danger that large numbers of entrepreneurs will quite innocently not keep this register and thereby commit a criminal office. I do not think that any Members of this Committee would want to see entrepreneurs prosecuted for the criminal offence of not keeping their public register.
I believe that this is an unnecessary piece of additional bureaucracy on small businesses. I believe that it will be substantially ignored out of ignorance of the requirements. I really do not see that there is any need to include small businesses within the public registers legislation.