house of lords official report - United Kingdom Parliament

GC 271 Arrangement of Business [17 JUNE 2009] Companies Act 2006 Order 2009 GC 272
Grand Committee
Wednesday, 17 June 2009.
Arrangement of Business
Announcement
3.45 pm
The Deputy Chairman of Committees (Lord Geddes):
Before the Minister moves that the first statutory
instrument be considered, I remind noble Lords that
in the case of each statutory instrument, the Motion
before the Committee will be that it do consider the
statutory instrument in question. I should make it
clear that the Motion to approve each statutory instrument
will be moved in the Chamber in the usual way. If
there is a Division in the House, the Committee will
adjourn for 10 minutes.
Companies Act 2006 (Part 35)
(Consequential Amendments, Transitional
Provisions and Savings) Order 2009
Considered in Grand Committee
3.46 pm
Moved By Lord Young of Norwood Green
That the Grand Committee do report to the
House that it has considered the Companies Act
2006 (Part 35) (Consequential Amendments,
Transitional Provisions and Savings) Order 2009.
Relevant document: 16th Report from the Joint
Committee on Statutory Instruments.
The Parliamentary Under-Secretary of State,
Department for Business, Innovation and Skills (Lord
Young of Norwood Green): The draft statutory instruments
which we are debating this afternoon are an important
part of our implementation of the Companies Act
2006. The Act reformed and clarified company law in
many areas and brought company legislation together
in one place. The Act makes it easier to set up businesses,
gives investors greater information and confidence,
and promotes shareholder engagement and effective
dialogue between business and investors.
The Act has been implemented in stages and these
statutory instruments relate to provisions which are
due to come into force in October 2009. This staged
approach gave companies time to prepare, allowed us
to coincide changes with parallel EU requirements
and allowed Companies House to update its systems
to support the new measures.
The first debate concerns two statutory instruments
relating to the Registrar of Companies. The basic
functions of the registrar are set out in Part 35 of the
Companies Act 2006. This largely replaces the relevant
provisions of the Companies Act 1985, but it provides
new powers and duties for the registrar which will help
Companies House maintain the register as a useful
and accurate source of information for users. The
draft Registrar of Companies and Applications for
Striking off Regulations supplement Parts 31 and 35
of the Act by making more detailed provision in four
areas: rectification of the register, annotation of the
register, language requirements and an application by
a company to have its name struck off the register.
The registrar does not currently have any statutory
powers to remove information from the register, although
the registrar will remove material if a court order
authorises it. It was recognised on both sides of this
House during the passage of the Bill that more needs
to be done to address the filing of inaccurate, forged
or fraudulent information on the register. The Companies
Act 2006 introduces two new statutory procedures
requiring the registrar to rectify the register—that is,
to remove material from the register under court order
or under a new administrative procedure on application
to the registrar. The new administrative procedure has
been introduced to permit certain information to be
removed from the register without a court order. It is,
we believe, an important step towards a more accurate
register, although I should make it clear that it is not a
panacea, and that matters requiring adjudication of
competing claims should be left to the courts.
Under the draft regulations, it will be possible for
an applicant to seek removal of company officers’
details from the register. Companies House will follow
the procedure set out in the regulations and, if no
objection is received, the material will be removed. It
will also be possible for companies to seek removal of
material relating to changes to a company’s registered
office address. We believe that the way in which the
provisions of the 2006 Act are framed in relation to a
company’s registered office and the grounds for
rectification effectively precludes the possibility of an
applicant, other than a company, making an application
in respect of a registered office address and prevents
the administrative procedure being used at all in respect
of a registered office address provided on incorporation
of the company.
An earlier draft of the regulations was withdrawn
in the light of fresh evidence that some companies
were purportedly appointing directors without the
consent or knowledge of the persons concerned. The
earlier draft addressed this issue where there was a
change of directors in an established company, but the
revised regulations address it also where directors are
purportedly appointed when a company is first set up.
We are very conscious that the provisions of the
Act and the draft regulations do not provide a full
answer to issues relating to the accuracy of the register,
particularly where the company has provided fraudulent
information. We will consider these matters further
and if solutions can be identified, we are minded to
consult on possible changes to the law in this area,
including to the 2006 Act in due course.
The second area where the draft regulations make
more detailed provision is annotation of the register.
They authorise the registrar to annotate the register
where he believes that any material is misleading or
confusing.
The Act contains rules about the language in which
documents can be drawn up and delivered to the
registrar under company and insolvency legislation.