Business Names Registration (MR. E. S. Payne)

– in the House of Commons at 12:00 am on 10th April 1970.

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Motion made, and Question proposed, That this House do now adjourn.—[Mr. Ernest G. Perry.]

4.2 p.m.

Photo of Mr George Wallace Mr George Wallace , Norwich North

I am very glad to reach this Adjournment debate. The waiting period has had its moments of tension.

I am grateful to have this opportunity to raise a matter which in the first instance affects a small businessman who is a constituent of mine, but the principle behind which, I am convinced, affects a large number of people.

While industry is increasingly dominated by giant combines, we must recognise that there is still a place for the little man. Quite a number of small specialist firms play a vital part in assisting the operations of their larger brethren. The man setting up his little business in manufacturing today faces considerable obstacles, particularly in regulations to be observed. Capital is of vital importance to him, and any unnecessary use of capital involved in the observance of regulations or the law could frustrate what could be useful contribution to the country's economy, particularly in exports.

A short while ago, as my hon. Friend the Parliamentary Secretary to the Board of Trade is only too well aware, I took up with her the case of a constituent, Mr. Payne of Norwich, now operating a company manufacturing data input and associated computer equipment. Originally he hit on the idea of calling his company Keytronics Ltd. He was advised by the Business Names Registry that the name was acceptable. Shortly afterwards, the Companies Registry said that the name was acceptable for registration, and later a search in the Trade Marks Registry revealed that the word "Keytronics" was not registered as a trade mark. Subsequently, however, it transpired that another firm was using the name "Keytronics", and, after negotiation, it was found that this other firm had registered the name with the Business Names Registry 12 months earlier. As a result, my constituent had to cease trading, at least temporarily, until a new company could be formed under the present name of F. S. Payne and Son (Norwich) Ltd.

The most important effect of this change and delay was that it cost my constituent £300 to £500 of his vital capital.

I wrote to my hon. Friend, and her reply of 11th February included the following passage—I should read it slowly because, quite frankly, it is worded in such a way that it needs to be— The Registrar has power to refuse to register a name which in his opinion is undesirable, but he does not in general consider a name to be undesirable solely because it is the same as one already registered. Similarly, the Registrar of Companies, who regards as undesirable a proposed name for a company which is too like the name of a company already registered, does not in general regard the existence of a registered business name as a bar to his registering a company by a similar name. After rereading that several times, I go round in ever-increasing circles.

The letter goes on: For these reasons no objection was raised in February 1969 to the proposed registration by Mr. E. S. Payne of the business name 'Keytronics' or to the later registration by him of a company by the name Keytronics Ltd., despite the earlier registration as a business name of 'Keytronics' by another proprietor. This is ridiculous. In the interests of the small businessman, the fact of an earlier registration should be revealed.

Later in her letter, my hon. Friend quoted from the Jenkins Committee on Company Law, referring in particular to paragraph 443 of its report, which implied that it was impossible to compare a list of 400,000 company names with a register of 800,000 business names, and stated for that reason that the Companies Registry and Registry of Business Names do not attempt to maintain the type of contact which would have avoided a lot of trouble to my constituent and saved him £300 to £500.

I find this almost incredible in this day and age. With modern filing methods, such an operation could be one of quick simplicity. In the Library of the House, we have some young and extremely attractive lady assistants—

Photo of Mr George Wallace Mr George Wallace , Norwich North

I say that because I admire their efficiency—lest it get me into trouble in certain quarters at home.

These young ladies demonstrate daily the miracles of modern reference systems in dealing with the often only too vague requirements of hon. Members. We all know how efficient their filing system in our own Library is. I am sure that these young ladies could introduce a system for the Board of Trade which would entail a fairly simple operation and be able to identify and compare all these names without great difficulty. My constituent, through his association with the computer industry, could do even more. Computers nowadays can give answers a darned sight more quickly than do some of the out-of-date methods at present used in some Departments.

It is not impossible to avoid the difficulties, pitfalls and expenses at present entailed. My constituent, in good faith, lost £300 to £500 in the labyrinth, with, I am informed, no chance of recovery from anyone. I realise that this state of affairs must affect quite a number of people, but I consider that he should have some recompense.

After considering this matter carefully for some time with my constituent and with others, I feel that it is time that a more up-to-date system was introduced at the Board of Trade to encourage and assist, not obstruct and financially penalise, people like Mr. Payne.

I hope that my hon. Friend and her Department will give the matter further consideration, not only so far as it concerns Mr. Payne but also other people, and, more important, arrange for close contact between the Business Names Registry and the Companies Registry, which appears to be completely nonexistent at present. I get the impression that they have not even been introduced to each other.

Photo of Mr Alistair Macdonald Mr Alistair Macdonald , Chislehurst

This appears to be an astonishing story of incompetence. My hon. Friend and I are members of the Estimates Committee. May I ask whether he has inquired when the Business Names Registry was last investigated by the Estimates Committee? Presumably it is spending public money. I wonder what value we are getting for that money if it cannot do a simple thing like telling people whether someone is already registered.

Photo of Mr George Wallace Mr George Wallace , Norwich North

My hon. Friend will know that the Estimates Committee is allocated subjects each Session and that its investigations take some time. Some of us are involved in very difficult investigations at the moment. Possibly the matter can be investigated at some time.

There appears to be no contact between the two registries. I believe that there should be contact and discussion between them. Any move along these lines can only be constructive and helpful in avoiding unnecessary expense and frustration to people who deserve encouragement. The whole set-up needs further consideration. To be fair to my hon. Friend, I realise that she cannot bind or commit the Minister. However, I hope that she will undertake to draw his attention to the need to modernise what is clearly an out-of-date and frustrating system.

My constituent has been extremely patient in this situation. Some people would have made far more provocative approaches. Although he realises that the situation is pretty hopeless concerning recompense to him, there is a principle involved. I therefore urge my hon. Friend at least to say that she will bring the matter to the attention of the Minister. Perhaps something more satisfactory can be achieved for the sake of those who are trying to set up in business for themselves and at the same time, let us face it, help the nation in its economic recovery.

Photo of Gwyneth Dunwoody Gwyneth Dunwoody , Exeter

I begin by thanking my hon. Friend for the courteous way that he has moved the Adjournment of the House on this interesting subject. I am also grateful to him for raising this matter as it gives me the opportunity to explain what the two registrars—the Registrar of Companies and the Registrar of Business Names—can and cannot be expected to do in regard to similar names.

I will set out a little of the history of this matter. In February, 1968, Keytronics was registered as the business name of a business to be carried on from a London address and described as "mail order, electronic components". The proprietor of that business name is not associated in any way with my hon. Friend's constituent, Mr. E. S. Payne.

A year later, in February, 1969, Mr. Payne wrote to the Registrar of Business Names to say that he was about to go into the business of manufacturing electrical components and had it in mind to use the name Keytronics. He asked to be informed how he should set about registering a business name. The registrar replied that the name Keytronics was acceptable for registration, and he enclosed with his letter an application form.

In the event Mr. Payne did not apply to register a business name, but instead formed a company which, on 9th May, was registered by the name Keytronics Ltd. Solicitors and agents, acting on Mr. Payne's behalf, made the normal inquiries before registration to ascertain from the Registrar of Companies that the name Keytronics Ltd. was available for the company which Mr. Payne wished to form.

Soon after Mr. Payne's company was registered solicitors acting for the proprietor of the business name Keytronics wrote to Mr. Payne to suggest that the activities of Mr. Payne's company might harm their client's business.

Mr. Payne evidently came to the conclusion that there was ground for this suggestion as, at the company's request, the name of his company was changed from Keytronics Ltd. to E. S. Payne & Son (Norwich) Ltd. on 24th July, 1969. In a letter to me, my hon. Friend said as he has said today, that it had cost the company £300 to change its name.

My hon. Friend has said that the company would not have been put to this expense if the Registrar of Companies had informed himself of the registration in 1968 of Keytronics as a business name and had regarded that registration as a reason for not accepting Keytronics Ltd. as the name of Mr. Payne's company. Alternatively, my hon. Friend has said that Mr. Payne would not have proposed Keytronics Ltd. as the name of his company if, when Mr. Payne had inquired about registering a business name, the Registrar of Business Names had informed him that the name Keytronics was already a registered business name and was not available for registration as the name of the business Mr. Payne intended to set up.

Photo of Mr George Wallace Mr George Wallace , Norwich North

A great deal of the loss was due to the fact that he had to cease trading and that there was legal expense involved.

Photo of Gwyneth Dunwoody Gwyneth Dunwoody , Exeter

I understand the difficulties that Mr. Payne has faced, and I am sorry that this has come about.

The Registrar of Companies has a duty to refuse to register a company by a name which in the opinion of the Board of Trade is undesirable, and one of the most common reasons for regarding a name proposed for a company as undesirable is that it is too like the name of an existing company. But a name proposed for a company is not regarded as undesirable solely because it is too like, or even identical with, a registered business name. The Registrar of Companies does not search the register of business names before deciding whether to accept a proposed name for a company, and he acted in accordance with established practice when he informed Mr. Payne's solicitor and agents that the name Keytronics Ltd. was available, and when in due course he registered Mr. Payne's company by that name.

My hon. Friend's other contention is that the Registrar of Business Names, when replying to Mr. Payne's inquiry, should have informed him that the name Keytronics was already registered and for that reason was not acceptable as the name of Mr. Payne's business. The Registrar of Business Names has power to refuse to register a name which in his opinion is undesirable. But, unless a name is very well known, he does not regard it as undesirable solely because it is similar to, or identical with, a name already on his register. He does not search his register when considering whether a name is acceptable for registration, and he acted in accordance with established practice when he informed Mr. Payne that the name Keytronics was available.

I will now explain why the practices of the two registrars are those that I have just described. The main concern of each registrar when exercising his power to refuse to register a name is the protection of the public. He is concerned to ensure that the public is not misled in a way which might harm it by names which are falsely indicative of, for example, Royal patronage or a connection with some official body, or of the company's or firm's standing or business.

The Registrar of Companies is also concerned to ensure that the public is not misled by confusing one company with another, and to the extent that he is successful he also incidentally protects a company's vested interest in its name. There is, I appreciate, a case for holding that the registrars should do more and try to ensure that the public is not misled by confusing a company with a trader trading under a business name similar to the name of the company, or by confusing two traders trading under similar business names. But, as most business names are registered by small concerns, the case is not a strong one.

The customers of a small grocer trading under a business name are unlikely to come to harm, even if a company running a chain of shops were to be registered by a similar name, and it is even more unlikely that it would be harmed by the proprietor of another shop being permitted to register a similar business name. However, the conclusive argument for not requiring more of the registrars is a practical one which arises from the very large number of names on the two registers. The Jenkins Committee on Company Law, from which my hon. Friend has quoted today, said in its report: We have been sufficiently impressed by the difficulties facing the Registrar of Companies—with a register of 400,000 companies—in preventing the use of too similar company names to be convinced that it would be impracticable to prevent similarities in the register of 800,000 business names, and still more impracticable in any combined register of over one million company and business names such as some witnesses have proposed. We therefore do not think that the Registrar of Business Names can reasonably be expected to do more than he does at present with regard to similar names. The committee's reference to a combined register shows that it might have added that it did not think the Registrar of Companies could reasonably be expected to do more than he does at present.

I take the point made by my hon. Friend that, with the advance of electronics in general, a great deal of highly expensive equipment might conceivably deal more efficiently with this problem, and I am sure that the Companies Department of the Board of Trade would welcome a vast amount of expenditure being injected into its day-to-day work. Whether this would be justified by practical results is open to a certain amount of discussion.

This problem was looked at by the Jenkins Committee, an independent committee which took a great deal of evidence and examined the existing practices of the Companies Department of the Board of Trade. Although I am quite happy to pass on to my right hon. Friend the President of the Board of Trade the views expressed this afternoon by my hon. Friend, I do not believe that a case of sufficient strength has so far been made to justify any alteration in existing practices.

Photo of Mr Alistair Macdonald Mr Alistair Macdonald , Chislehurst

I recognise the practical difficulties to which my hon. Friend has referred, but if they are so conclusive why does the Registrar of Business Names keep a list at all? Why does he not confine himself to saying whether names are desirable or undesirable? What is the point of keeping a list if it is never to be used for purposes of com- parison? We are spending either too much or too little.

Photo of Mr George Wallace Mr George Wallace , Norwich North

I should like to go a little further. The Inland Revenue is stocking up with computers which will be available in Government Departments for use. This would be a simple solution.

Photo of Gwyneth Dunwoody Gwyneth Dunwoody , Exeter

I am grateful to my hon. Friends for their suggestions, which will always be examined with great care by my right hon. Friend. I cannot, however, do other than find a certain amount of wry amusement in two important responsible members of the Estimates Committee so gaily committing my Department to what would be a very large expense for what could not, perhaps—I put it no higher—be justified by the benefit that would be felt by the taxpayer and those who use the facilities offered at Companies House.

If there is any comfort that I can offer my hon. Friends this afternoon, it is that I will certainly study the points which they have made and pass them on carefully to my right hon. Friend the President of the Board of Trade.

Adjourned accordingly at twenty-four minutes past Four o'clock.

Question put and agreed to.