Company, Limited Liability Partnership and Business Names (Sensitive Words and Expressions) Regulations 2014

Lord Young of Norwood Green Excerpts

Wednesday 17th December 2014 Lords Chamber

[Lord Popat (Con)]

My Lords, I should point out that I shall be speaking to both sets of regulations. However, before I deal with the substance of the regulations, I would like to draw noble Lords’ attention to the sensitive names regulations. These are subject to a special parliamentary procedure whereby they must be approved within 28 days of being made.

The regulations offer companies more flexibility, they are deregulatory and they consolidate current names and trading disclosure regulations. They will also apply to limited liability partnerships and businesses. The changes being made will remove burdens from business. When setting up a company, LLP or business, entrepreneurs need to concentrate on getting business done and should not have to deal with unnecessary red tape associated with the name that they wish to give a business. That said, it is important that there are some rules associated with the chosen name—for example, that it is not the same as or similar to a name that is already in use or that the name does not convey something that could mislead the general public and result in harm. These regulations seek to strike a balance between the need to deregulate, and thus provide flexibility to companies to choose their name, and sufficient protection for the public.

The Company, Limited Liability Partnership and Business Names (Sensitive Words and Expressions) Regulations 2014 list the words and expressions that are considered sensitive under the Companies Act 2006. As a result of the Company and Commercial Law Red Tape Challenge, this list has been reduced by 26 words compared to current regulations. The consultation on this issue asked three questions: whether it was necessary to continue to have regulations specifying words and expressions deemed to be sensitive, thereby requiring approval for use in a name; if so, whether the current list of sensitive words and expressions should remain the same; and whether the sensitive words and expressions list could be reduced. The responses were clear that some words could mislead the public into thinking that the company has pre-eminence, a particular status or function. Therefore, it is necessary to regulate the use of some words and expressions.

However, most responses also thought that it would be beneficial to business to review the sensitive words and expressions list and reduce it where possible. By reducing the list, we will be reducing the burden on those businesses that may wish to use the words or expressions that were previously considered to be sensitive. Any proposed company name that includes a specified word or expression must have the approval of the Secretary of State. Approval is granted by the Registrar of Companies at Companies House on behalf of the Secretary of State. Furthermore, in some cases, the views of other specified bodies must also be sought in connection with an application for a name containing a sensitive word or expression; for example, to use the word “bank” a company would need the support of the Financial Conduct Authority.

When deciding which words to remove from the list, we considered the number of applications received over a period, including whether or not approval to include the word was normally granted and the likely impact on the public should the word or expression be removed from the list. I am confident that the words that we are removing will not have a negative impact on the public if they are included in a company, LLP or business name unchecked.

In moving the second set of regulations, the Company, Limited Liability Partnership and Business (Names and Trading Disclosures) Regulations 2014, I begin by making it clear that the majority of the content of these regulations is merely a consolidation of five current statutory instruments relating to company names and trading disclosures. These regulations have been consolidated in line with Red Tape Challenge principles. Responses to the consultation offered support for merging the regulations.

Although this instrument essentially restates previous regulations, there are some key changes that I would like to draw to your Lordships’ attention. The most significant is that we have extended the list of characters that can be included in a company name. Under these regulations a company will be able to include accents, diacritical marks and ligatures in its name. This change recognises the advances in technology that will now enable Companies House to accept these characters and, more important, that many companies that register in the UK operate on an international basis and may wish their name to reflect this.

The regulations also make a change to the trading disclosure requirements. It is usual for a number of companies to be registered at one location. In circumstances where six or more companies share one location, the current requirement is for the name to be displayed continuously for 15 seconds at least once every three minutes. We are relaxing this requirement so that if there are six or more companies at one location, a list of their names may instead be made available on request.

A number of changes are also being made when considering whether the company name is the same as another one. These changes will also allow groups of companies to swap the names within their group structure more easily. This is something that was particularly highlighted by business, which felt that the current regulations were particularly unhelpful in these circumstances. A number of common words such as “group”, “holdings” and “international” will no longer be disregarded when comparing names; for example, Butchers Holdings Ltd will no longer be considered the same as Butchers Ltd, making it easier to register such a name if the other is already registered.

I hope that your Lordships will agree that the regulations before us strike the right balance of protecting the public and allowing many more companies to choose a name that they believe best reflects their business. These regulations make a number of small changes that will reduce the red tape that companies currently have to cut through and I commend them to the House.

[Lord Young of Norwood Green (Lab)]

My Lords, what a thrilling set of statutory instruments to end the year with. I can understand why people have stayed in the Chamber. To paraphrase the bard, I suppose that a company’s name would be the same as any other if it was allowed to use the diacritics and ligatures and things that I must admit I was not absolutely sure of until I waded my way through the regulations. We are happy to support what seems a common-sense revision of the regulations. I suppose that the only concern one might have is to ensure that, in creating new flexibilities, this does not give an opportunity for companies to behave in a way that is less than ethical. The only question that comes to mind as we introduce these changes is: will there be any review process to see whether the high standards that we aim to achieve in company behaviour are maintained? The only other thing I want to say is to wish everybody a merry Christmas and a happy new year. That includes the staff and everybody else.

[Lord Popat]

My Lords, in terms of companies being ethical, I think that we have a world record in that respect. Our company law protects the public and the Government and makes sure that companies operate ethically. As for reviews, there was a review in 2006, instigated by the party opposite, and I recall the noble Baroness, Lady Vadera, doing one in 2009. This is another one in 2014. I hope that we are doing more to make it easier for companies to trade in the UK. I thank the noble Lord for his good wishes for Christmas and I commend the regulations to the House.