Clause 10
Company Law Reform Bill [Lords]
10:30 am
Margaret Hodge (Minister of State (Industry and the Regions), Department of Trade and Industry; Barking, Labour)
It is important that we consider clause 10 against the background of other provisions, particularly those in part 19 on share capital, which requires certain types of company to provide an updated statement of subscribed capital whenever the subscribed capital changes. The statement required in clause 10 is essentially a snapshot taken at the time of the formation of the company, as the hon. Gentleman said. It is likely to be superseded over time by further statements of the same sort—for example, if new shares are allotted or the company’s share capital is reorganised. The question then becomes where those statements should appear. The choice seems to be among the memorandum, the articles or, as the Bill provides, a separate statement. I shall explain why we believe that a separate statement is the right approach.
As we have discussed, the memorandum will contain nothing other than the historical information. As the statement of capital will change over time, that does not appear to be the appropriate place in which to put the statement. On the face of it, as the hon. Gentleman said, using the articles makes more sense. I can see why he is attracted to the logic of that argument. Articles contain information of ongoing relevance about the company and may, on occasion, need to be updated.
However, there is a requirement in the law that whenever any element of the articles is changed, a full new and updated copy of the articles has to be produced and filed with Companies House. That requirement is sensible, ensuring that those who need to consult the articles will never need to look in more than one place to understand all the provisions contained in them, but the implications could be onerous if the statement of capital was involved. Some companies may well change their subscribed capital frequently, and certainly more frequently than we would expect them to change other elements of their articles. It would be excessive to require them to produce a fully revised new set of articles every time they changed their share capital.
We have taken a pragmatic approach. The Bill provides for the statement to be an independent element of information that will appear separately on the Companies House register and which will be easier to identify by searchers of the register.