Draft Companies (Address of Registered Office) Regulations 2016 Draft Registrar of Companies and Applications for Striking Off (Amendment) Regulations 2016

Kevin Brennan Excerpts

Thursday 17th March 2016 General Committees

[Kevin Brennan (Cardiff West) (Lab)]

Happy St Patrick’s day to you, Mr McCabe, and to the Committee. I have to say that, as the son of a man from west Cork—my late father, who is sadly no longer with us—but happy St Patrick’s day to one and all.

There is a small burden to business set out in the impact assessment. I am sure that the Minister would like me just to correct her on that. I think that £180,000 is given as the net cost to business of resolving disputes about registered offices that companies state on the public register of companies. However, the Minister is right that the measure is not controversial. I think everyone would agree that it is entirely improper that companies are able easily to register someone else’s address as the address of a business, whether by error, as does happen, or with more malevolent intent. That can be done to avoid the serving of writs or other measures such as bailiffs calling, or even to avoid customers contacting the company via its registered address at Companies House.

There should be a quick and easy procedure to rectify such occurrences, without affecting the business or individual whose address might have been registered in that way. Clearly, it could be distressing and damaging to the reputation of an individual or company if bailiffs called at their address in relation to something that was nothing to do with them. The reputational damage, not to say the distress and cost, could be great.

It is right, therefore, that the Government should seek through the regulations before us to rectify the problem, just as it is right to rectify the problem that directors are often wrongly registered with companies. According to the Government’s impact assessment, there are 500 or 600 cases of that a year. That is a relatively small number, given the number of directors that there are, but for each individual it could be the cause of considerable embarrassment or difficulty. Being wrongly registered as a director of a company could lead to their being drawn into disputes that are nothing to do with them. Again, it is wrong that a person should be prevented from removing their listing as a company director simply because the company objects, as the law currently states. The registrar should be able to resolve the dispute in a straightforward and proper manner, using a simpler procedure.

The measures are uncontroversial and we do not intend to divide the Committee, but I have one or two questions for the Minister. She will know that the free protected online filing scheme, known as PROOF, already gives greater security to a company filing its details at Companies House. It is surprising that not all companies are members of the scheme. The two main reasons are, first, that once a company has joined PROOF, almost all of its documents have to be filed electronically and, secondly, that many officers of small companies have simply never got round to applying to join the scheme. Will she tell the Committee whether there is any intention to make the scheme compulsory for newly registered companies or to promote it more rigorously to companies? That might make it possible to avoid some of the difficulties that the Committee is trying to rectify.

What does the Minister feel is the size of the problem? How many companies have their addresses hijacked each year, and what are the costs to business of trying to resolve those disputes? Although there is a small cost to businesses from introducing the measures, there are also, obviously, costs in the existing situation.

Do the Government intend to look at the penalties and sanctions that can be exercised against rogue companies that hijack addresses? What measures do they have in hand or are they thinking about to tackle that problem? In addition to an easy passage for companies that are victims of the practice, there should, on the other side, be sanctions for those who misuse the system in this way and cause businesses and individuals cost, distress and reputational damage.

It would be helpful if the Minister elucidated those points a little further, but I reiterate that the regulations appear to the Opposition to be sensible and proportionate measures that will assist businesses. Therefore, it is not our intention to vote against them this morning.

--- Later in debate ---

[Anna Soubry]

At the moment, I do not know the answer to that. I will write to my hon. Friend. Is it not excellent that we have Members on the Back Benches who know what they are talking about? They have huge experience of these things. [Hon. Members: “Hear, hear.”] My hon. Friend is a very good example of the wealth of experience that exists in this place.

By way of magic, I can say that section 1095 of the Companies Act 2006 provides a way for the registrar to remove factually inaccurate or forged information or material deriving

“from anything invalid or ineffective or that was done without the authority of the company”.

That may be helpful in answering my hon. Friend’s excellent questions.

I am pleased that the regulations are not contentious. Some important and interesting points have been raised, and I will deal with them all by way of letter.

[Kevin Brennan]

I asked some questions about the voluntary PROOF scheme that was introduced in 2005. Can the Minister say anything about that, or will she confirm for the record that she intends to write to the Committee about it?

[Anna Soubry]

I am so sorry, Mr McCabe. I should have made it clear that all Members who have asked me questions will get proper letters. I always say that the usual rules apply: if I cannot answer it, I will provide an answer by way of letter. That letter will specifically look at the questions that the hon. Gentleman has raised about that scheme, such as whether it can be made compulsory, whether we should do more to promote it, and so on and so forth. That may be another way to deal with these problems.

The important thing is that the regulations have got the balance right. The cost sounds like a lot of money, but when it is spread across the 3.6 million companies registered with Companies House, it is a drop in the ocean. The regulations are the right way to go about things. Yes, there will be more of a duty on companies, but it is very minor. It is about striking the right balance so that we do not place too much of a burden on companies, but we do redress this wrong. There can be few things as annoying as discovering that someone has used one’s address. If bailiffs turn up, that is the ultimate distress and a gross annoyance.

I am pleased that the regulations are not contentious. I apologise for not having all the answers, but we will sort that out by way of letter. On that basis, I commend the regulations to the Committee.

Question put and agreed to.

DRAFT REGISTRAR OF COMPANIES AND APPLICATIONS FOR STRIKING OFF (AMENDMENT) REGULATIONS 2016

Resolved,

That the Committee has considered the draft Registrar of Companies and Applications for Striking Off (Amendment) Regulations 2016.—(Anna Soubry.)