Small Business, Enterprise and Employment Bill

Debate between Lord Flight and Baroness McIntosh of Hudnall

Monday 19th January 2015 Grand Committee

[The Deputy Chairman of Committees]

My Lords, this is Committee and it is perfectly in order for noble Lords to speak as many times as they wish. I also remind noble Lords that it is customarily the case that they address the whole Committee and not merely the noble Lord who asked the question.

[Lord Flight]

My Lords, on the specific point, I just add the following. First, it would be perfectly possible to operate a non-UK shell company as the Bill stands so the Bill is completely avoidable for those intent on doing evil. Secondly, with regard to UK companies, it might be possible to include a definition. The point of a shell company is that it does not have a business. I am very clearly talking here about small companies that have an active business. Finally, anyone with evil intent will not register a small company, even if it is a UK company, for the reasons the noble Lord just pointed out: the chances of being discovered are very small.

Therefore, I beg to suggest that the Bill is ineffective in this area as it stands. What would be effective is a significant burden on the innocent—the runners of small family businesses. As my noble friend Lord Leigh pointed out, the issue of who has control is sometimes quite debateable because there may be more than one person holding 25% and the way family affairs are organised may be complicated.

For some reason, my Amendments 48 and 49 are also included within this group. I did not really want to combine them with Amendment 36A, which is very different in nature, but nor did I want them not to be aired by default. These two amendments, together with Amendment 51, are practical proposals which emanated essentially from the BVCA, which I believe has had some practical discussions with government about possible ways of handling the points raised.

Amendments 48 and 49 extend the provision in the Bill applying to English limited partnerships to include other limited partnerships without a legal personality which are comparable to an English limited partnership. Many overseas limited partnerships invest in UK companies and, unless there are arrangements along the lines of Amendments 48 and 49, the effect would be to require information on all limited partnership investors to be put into the register. This would create confusion about who was the controller of the English company the partnership was investing in as well as creating unnecessary and costly administration. The main relevant overseas companies to which this applies are Channel Islands limited partnerships which are frequently used by private equity firms to invest in UK companies. This is a practical issue which it is necessary to deal with, or where there are non-UK limited partnerships investing in UK companies we could end up with a wealth of unnecessary and quite confusing information.