Clause 74
Company Law Reform Bill [Lords]
1:30 pm
James Brokenshire (Hornchurch, Conservative)
I beg to move amendmentNo. 63, in clause 74, page 32, line 11, leave out subsection (3).
The clause deals with appeals from a company’s named adjudicator to the court. Subsection (3) deals with suspending the adjudicator’s order on appeal. The problem is highlighted by the CBI, which says:
“There should not be an automatic suspension of the adjudicator’s order on appeal...Otherwise this sub-clause is an encouragement to appeal and to continue trading under an offending name, damaging the applicant’s goodwill even further.
Rather, it should be open to the respondent to seek a court order suspending the order, as it should be open to an applicant to seek an order preventing the respondent company from trading under the name until the questions concerning the abuse by the respondent have been settled.”
I note that the matter was highlighted in another place. Lord McKenzie of Luton was not persuaded by a similar argument. He suggested that the concerns were unfounded, on the basis that registering a name does not confer a right to trade. If a company were forced to change its name immediately, someone else might take the name.
It is worth considering some of his specific comments in Grand Committee. Lord McKenzie said:
“If a company had to change its name immediately, its name might then be taken by anyone else. In particular, it is likely that the applicant would wish to register the name, if only as a precautionary measure. This means that the company would have lost the name even if the court were to reverse the adjudicator’s decision.”
He also said:
“the fact that the company has registered a particular name does not confer a right to trade under it.”—[Official Report, House of Lords, 1 February 2006; Vol. 678, c. GC121-22.]
I hear what the noble Lord said, but on the point about immediate change, there is surely a risk that that would happen in all circumstances covered by clause 70. If an order were made, a company would clearly want to protect its position immediately. How would that mechanism work? I was not persuaded by his comment.
We are not talking about trading names but corporate names. There is a fundamental distinction. For that reason, I tabled the amendment suggested by the CBI. I look forward to the Minister’s response.