Jonathan Djanogly (Shadow Solicitor General (Also Shadow Minister for Trade and Industry), Law Officers (Assist the Home Affairs Team); Huntingdon, Conservative)

I beg to move amendment No. 2, in clause 9, page 4, line 16, leave out paragraph (b) and insert—

‘(b) the address in the United Kingdom where the registered office is to be situated,'.

Eric Illsley (Barnsley Central, Labour)

With this it will be convenient to discuss amendment No. 64, in clause 86, page 36,line 29, after ‘office', insert ‘in the United Kingdom'.

Jonathan Djanogly (Shadow Solicitor General (Also Shadow Minister for Trade and Industry), Law Officers (Assist the Home Affairs Team); Huntingdon, Conservative)

The clause replaces sections 2 and 10 of the 1985 Act, which refer exclusively to the delivery of a memorandum. The Bill changes how certain information is delivered: information that is set out in the memorandum will be provided to the registrar in accordance with the clause, which describes, among other things, the contents of an application for registration. It states that the application must contain a statement of the intended address of the company’s registered office and a copy of any proposed articles of association.

A probing Opposition amendment tabled in Grand Committee in the Lords was designed to find out why companies will need to state their country of incorporation, as an objective of the Bill is to extend company law to the whole of the UK. We feel that that point merits further discussion.

The application for registration, which is covered by amendment No. 2, and the resulting registered office, which is covered by amendment No. 64, must be in England, Wales, Scotland or Northern Ireland, as set out in part 6. In this globalised age, we are trying to simplify rules as much as possible to facilitate companies doing business. One reason for doing so is the certificate of incorporation, which will often need to be sent to overseas companies or used in legal opinions to validate the existence or good standing of a company.

As the clause stands, the certificate will say that a company is incorporated in England and Wales, in Scotland or in Northern Ireland. Frankly, that could be confusing for foreigners, who like to think that they are dealing with the United Kingdom. It would therefore  be easier if the certificate said, “Registered in the United Kingdom.” That is what the amendments would achieve.

In Committee in the Lords, it was mentioned that non-company laws, such as insolvency laws, vary between the countries of the UK. In trying to move the Lords debate on a bit, I say to the Minister that insolvency processes can be started in any country, in the same way that a Scottish and French company could agree to a contract under English law. I am therefore not sure why it is necessary to have the country of incorporation on the certificate. I ask the Government to consider the issue.

Margaret Hodge (Minister of State (Industry and the Regions), Department of Trade and Industry; Barking, Labour)

As the hon. Gentleman said, the matter was considered in Committee in the Lords. I appreciate the motivation that underpins the reconsidered amendment before us, because in a sense it seems overly bureaucratic to require that an application for registration must state whether the company’s office is to be registered in England and Wales, in Wales, in Scotland or in Northern Ireland.

As the hon. Gentleman said, the main reason for that is that there are three separate jurisdictions within the UK. He mentioned the need for clarity for the international interests that will be involved in the operation of UK companies, but I put the opposite point to him. For an international organisation or somebody from abroad who wishes to engage with a company in the UK, it will be more helpful to know which jurisdiction they will have to deal with rather than have to attempt to find out for themselves whether the jurisdiction is English and Welsh, Scottish or Northern Irish. That will bring clarity to the increasingly international nature of business dealings.

David Jones (Clwyd West, Conservative)

Appreciating all that the Minister says about the jurisdictional points, is it not the case that England and Wales is a unified jurisdiction? Why, therefore, is it necessary to distinguish between England and Wales, and Wales? Admittedly, there are certain language requirements in Wales, but that is not a jurisdictional point. It is purely a procedural one.

Margaret Hodge (Minister of State (Industry and the Regions), Department of Trade and Industry; Barking, Labour)

We have put that particular facility in place because it will give a company the opportunity to opt for the jurisdiction in which it wishes to operate. A company may want to take advantage of special provisions that might apply, for example, to Welsh companies. Taking the example of the Welsh language, a company may wish to use the Welsh equivalent of “limited” or “plc”, and provided it gives a translation, the company may then file documents in Welsh. If a company wishes to do that, I see no reason why we should remove or widen that concession.

David Jones (Clwyd West, Conservative)

I appreciate that fully, but surely this is not a jurisdictional point. It is a matter of procedure and the filing of documents. It does not relate to jurisdiction because England and Wales are a unified jurisdiction.

Margaret Hodge (Minister of State (Industry and the Regions), Department of Trade and Industry; Barking, Labour)

My notes say that it is a jurisdictional point, and if a company wishes to take  advantage of the legal facilities that are available through incorporation in Wales, it can do so. If the legal facilities are Welsh facilities, we must spell that out in the place in which the company incorporates itself.

A company pleading insolvency could start insolvency litigation wherever it wished to do so. The hon. Member for Huntingdon (Mr. Djanogly) is right in principle, but there is a strong presumption in EU insolvency regulation that it is proper to start insolvency proceedings in the place of incorporation. He will also know, if he has read the House of Lords debate, that not only insolvency legislation, but property legislation and disputes over registers, differ between the legislative frameworks for the separate nations.

Justine Greening (Putney, Conservative)

I am slightly confused by the Minister’s comments about jurisdiction, mainly because, for example, in part 16, which deals with the auditor offence that is being introduced by the Government, there are separate clauses for England and Wales, for Northern Ireland and for Scotland, but no separate clause for Wales. I seek clarification as to whether the jurisdictional position is separate, or indeed joint, for England and Wales.

Margaret Hodge (Minister of State (Industry and the Regions), Department of Trade and Industry; Barking, Labour)

Separate parts of legislation may have a Wales-only implication. I am referring in particular to the desire of a company to do business in the Welsh language. That might be particular to Wales. Other legislation will be relevant to companies where the jurisdiction in England and Wales is the same. I do not dispute that, but if there are clauses that are specific to Wales, we should not limit the capacity of a company that wishes to choose to incorporate in Wales to do so. That is all we are trying to do.

The requirement to state the jurisdiction in which the company’s registered office is situated might appear bureaucratic and purposeless, but in fact it is much needed. It is neither outmoded nor, if I may say so, trivial. If the amendment were adopted, other amendments would be needed to determine, when relevant, the law applicable in the part of the UK in which the registered office was located.

Amendment No. 64 is unnecessary because a company’s registered office must always be in the jurisdiction chosen when it was incorporated. There is no provision for the change of jurisdiction. A company’s registered office can be changed only by giving notice to the registrar, so it is impossible for the registered office to be moved elsewhere.

With that explanation and response to issues raised by hon. Members, I hope that the amendment will be withdrawn.

Jonathan Djanogly (Shadow Solicitor General (Also Shadow Minister for Trade and Industry), Law Officers (Assist the Home Affairs Team); Huntingdon, Conservative)

My hon. Friend the Member for Clwyd, West (Mr. Jones) made an important point: we have to differentiate between jurisdiction and mechanics. He made that point well.

One of the better aspects of the Bill is the merger of Northern Ireland with England and Wales for the purposes of company law. That will save time and  provide transparency. We thought that the amendment went down the same route. The Minister has a point: the proposed changes would require knock-on amendments. However, we do not believe that the amendment is any worse because of that. Nevertheless, I hear what she says, and I am pleased that we have had the debate. On that basis, I beg to ask leave to withdraw the amendment.