Clause 77
Company Law Reform Bill [Lords]
1:45 pm
James Brokenshire (Hornchurch, Conservative)
We come to the change of name and the mechanism by which a company is able to do that.
In essence, clause 79 provides a new means by which a company can change its name, rather than by the customary means of a special resolution passed by the members of the company. I acknowledge that we considered a further example during our earlier discussions of a slight change in relation to the ability of directors to change a name where the Secretary of State has given a direction. That is a fairly narrowly defined arrangement, which is reflected in the 1985 Act.
The Bill appears to establish an entirely new mechanism that allows for a company to change its name in other ways, however. I am concerned that if the mechanism is allowed, the shareholders—who would normally be notified by virtue of the fact that their consent would be required through a special resolution—might be cut out of the process if, for example, a right existed in a company’s articles of association for the directors to change the name of the company by board resolution. Although that would give the company flexibility, it is important that shareholders should know the name of the company of which they are shareholders. Such a right, buried deep in a thick pile of articles, might not be picked up on by members of the company, but I would want to ensure that their rights were protected.
It is in that context that I seek the deletion of clause 79 and subsection (1)(b), because of the clarification needed and the lack of real feel about what the position of members is or precisely what situations the Government are contemplating. A very different step change is proposed and, although I recognise the need for flexibility and deregulation, it is also important that the interests of shareholders should be maintained and that they should be properly informed of any changes that might occur to the company of which they are members. That is the underlying reason for my amendment, which would delete subsection (1)(b), and my proposal that clause 79 should not stand part of the Bill.
Amendment No. 143 touches on a slightly different point. It proposes that companies’ names can be changed by order of the court, under clause 74, given that the court is given the power to make any order that the adjudicator might have made on appeal, which could include requiring a company to change itsname. Amendment No. 143 contemplates that circumstance—it does not block it off—and would ensure that the issue was properly addressed.