Clause 56
Company Law Reform Bill [Lords]
6:30 pm

James Brokenshire (Hornchurch, Conservative)

I beg to move amendment No. 116, in clause 56, page 22, line 24, leave out ‘registered’ and insert ‘incorporated’.

John Bercow (Buckingham, Conservative)

With this it will be convenient to discuss the following amendments: No. 117, in clause 56, page 22, line 24, after ‘includes’, insert

‘, or change its name to a name that includes,’.

No. 121, in clause 58, page 23, line 18, leave out ‘registered’ and insert ‘incorporated’.

No. 122, in clause 58, page 23, line 18, leave out ‘by’ and insert ‘with’.

No. 123, in clause 58, page 23, line 19, after ‘includes’, insert

‘, or change its name to a name that consists of or includes’.

No. 57, in clause 58, page 23, line 21, at end insert—

‘( ) Regulations under this section shall not require a company to change its name.’.

No. 128, in clause 66, page 27, line 32, at end insert—

‘(6) Nothing contained in this section shall prevent a company continuing to use its name if such name was registered with the registrar of companies prior to the date of any regulations made under this section.’.

James Brokenshire (Hornchurch, Conservative)

I offer my warm welcome to you, Mr. Bercow. This is the second Committee on which I have had the pleasure of serving under your chairmanship, although I know that this is your first Bill Committee. The first occasion was when we considered a statutory instrument relating to double taxation treaties for Japan, Gibraltar and Botswana, so it is clear that you have been earmarked for Bills and legislation of a technical nature. We are therefore grateful for your stewardship this afternoon and on future occasions; I am sure that we will get into some quite technical issues during our considerations. I also offer a warm welcome to the Ministers—the Minister for Industry and the Regions, who is new to her role, and who will take this Bill forward, and the Under-Secretary of State for Constitutional Affairs, the hon. and learned Member for Redcar (Vera Baird). I imagine that this is her first Bill as a Minister.

I am making what may be described as a guest appearance on the Opposition Front Bench. I might flatter myself to think that it is on the basis of the strong oratorical skills that I have demonstrated since entering the House, but I fear that it is more due to my experiences as a corporate solicitor before I entered this place than anything that has taken place while I have been here. I remain a non-practising solicitor, and I declare that interest formally.

We come on to part 5 of the Bill, which deals with company names, restrictions on the names that a company may use, the manner in which a company may change its name and the procedures for challenging the use of a company name. Clause 56 makes provision to require the approval of the Secretary of State for a company’s use of a particular name that is specified in regulations.

Amendments Nos. 116 and 117 are technical in nature; the clause refers to a company being

“registered under the Companies Acts”,

but that drafting could be construed as limiting the ambit of the clause to a situation in which a company is about to be registered or established. The intent of the additions proposed under the two amendments is to ensure that the clause catches both the incorporation of a new company and an existing company that is seeking to change its name to one that is on the prescribed list. That is the intention of the clause, and the amendments seek to make that clear.

Amendments Nos. 121 to 123 relate to clause 58, which deals with restrictions placed on the use of certain symbols, characters or marks in a company name. The amendments make it clear that clause 58 covers a new incorporation and the change of name of an existing company.

Amendment No. 57 also relates to clause 58. Clause 58(1) uses the general term “registered” and clause 58(2) states that the regulations under the clause

“may prohibit the use of specified characters”,

so it seems possible for the regulations to cover the names of existing incorporated companies, forcing them to change their names with potentially significant cost implications and the loss of good will attached to the business. The issue was raised by my noble Friend Lord Hodgson in the other place during the Grand Committee on the Bill, and I note that the Minister, Lord McKenzie, stated:

“I assure the Committee that if a word is added to the list that is part of an existing company’s name, that existing company would not be required to change its name: there is no power to require a change in such circumstances.”—[Official Report, House of Lords, 30 January 2006; Vol. 678, c. GC48.]

I am aware of the issue about whether debates in this place or another place can be used to interpret a particular statute should it ever become subject to challenge, which was also raised by my hon. Friend the Member for Grantham and Stamford (Mr. Davies). However, the drafting of the clause could give grounds to suggest the contrary, and in the interests of certainty and clarity I hope that the Minister will feel generous enough to give ground on that point.

Amendment No. 128 makes substantially the same point as amendment No. 57 but in relation to clause 66, by seeking to make it clear that prohibiting theuse of certain specified words, expressions or other indications in the name of a company should not affect a company that has been incorporated or is registered with such a name. I should stress that that is without prejudice to the additional powers of the Secretary of State contained in clauses 75 and 76, which protect against misleading or harmful names used by existing companies, which we shall obviously discuss later.

Vera Baird (Parliamentary Under-Secretary, Department for Constitutional Affairs; Redcar, Labour)

I, too, welcome you to the Chair, Mr. Bercow. We were until recently joint-chairs of the all-party Burma group, and I know what an amiable person you are to work with and what an active Chairman you are.

I thank the hon. Member for Hornchurch (James Brokenshire) for his kind welcome. I shall be speaking on the whole of part 5, as I assume he will be, so we will do it together and I imagine that we will make progress on it.

I am grateful to the hon. Gentleman for his explanation of the thinking behind the amendments. As I understand it, it crystallises around seeking certainty that the provisions of clauses 56 and 58 are limited to new incorporations and changes of name by existing companies and that that is their point. I agree entirely that it would be wrong if it were possible for regulations to require a company to change its existing name, but we are confident that it is not possible for that to occur.

The regulations will apply only to names registered after the regulations come into force, namely those taken on incorporation and those of existing companies that change their names. Let us consider the phrase “to be registered”, which is probably part, or perhaps all, of the trouble. It is intended to mean “to become registered” and not “to continue to be registered”. I hope that that is a sufficient clarification for the hon. Gentleman to be assured that the amendments are not necessary.

It is clear that if the intention of the new section were to enforce changes of name on existing companies, the clause would set out the consequences were a company name not to be changed if it did not comply with the regulations, much as such provisions  are set out in clauses 65, 68, 75 and 76, and I hope that that reassures the hon. Gentleman. The phrasing “to be registered” in clause 56 and the other clauses that he mentions is exactly the same as that in clause 55, to which he did not propose any amendment. I can understand why clauses 55 and 58 might crystallise his concern more than clause 55 did, but I hope I have satisfied him that it is not our intention that it will be possible under these provisions to compel an existing company to change its name—nor should it be construed in that way—but that the measure will be confined as he wishes it to be.

James Brokenshire (Hornchurch, Conservative)

I am grateful to the Minister. The query about the drafting was not necessarily mine; the Law Society questioned whether there was certainty as to the meaning or scope of the particular form of words. While my preference would have been to gain clarity by amending the wording, I hear what she says, and I beg to ask leave to withdraw the amendment.