Clause 58

Company Law Reform Bill [Lords] – in a Public Bill Committee at 9:30 am on 22nd June 2006.

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permitted characters etc

Question proposed, That the clause stand part of the Bill.

Photo of James Brokenshire James Brokenshire Conservative, Hornchurch

The clause gives the Secretary of State new powers to restrict what letters and symbols may be used in the company’s registered name and to specify a permitted format for a name. It is a new provision and is not contained in the 1985 Act. I would be grateful if the Minister clarifed why it was felt that the additional clause was needed. I would also be grateful if she set out the potential problems that the Government seek to address and what marks and symbols she has in mind for the subsequent regulations.

Photo of Vera Baird Vera Baird Parliamentary Under-Secretary, Department for Constitutional Affairs

The clause provides power to make regulations that specify the characters that can be used in a company’s registered name. The primary purpose of the restriction of the choice of name is to make it easy for the public to find information about the company on the record. Names that use unfamiliar characters, such as those drawn from oriental languages, or that begin with a string of characters that are not letters apparently create confusion. They are difficult to remember and difficult to find in an index. So, regulations made under the clause would be of great assistance to people looking for information about companies. The restriction on choice would impose no cost on companies.

We will consult on the use of the power. That may reassure the hon. Gentleman. We intend to use it to specify all the letters used in the official languages of the European Union and the most familiar other characters such as currency symbols, punctuation marks and, perhaps, the first few characters in a name might be put in the regulations. It will also be possible to restrict the formatting used in the name as registered. That would not affect how companies display their name, so the use of things such as superscript, subscripts, exotic font, mixtures of capital and lower-case letters—and even names with their characters arranged in a circle—would not be affected by the regulations. The point is that the regulations will not make any difference to logos.

Why have restrictions? That is the thrust of the hon. Gentleman’s question. At present, they are none, but Companies House is apparently coming under increasing pressure to accept names and characters that it does not have the technology to handle, and the time has come for company law to provide a power to restrict the characters that are used. Such regulation is not unnecessary, because it is important to distinguish between a company’s registered name and a trade mark. There are no property rights in a registered name, which is only an identifier, so obliging companies to go through this process really is not much of an imposition. One might ask why companies should not be allowed to use whatever names they want. However, there will be no such restriction, because companies are not required to use their registered names in the course of business in any event.

I hope that that satisfies what I guess is the hon. Gentleman’s curiosity about the need for the  provisions, and the point is, indeed, interesting. With that, I hope that hon. Members will agree that the clause should stand part of the Bill.

Photo of James Brokenshire James Brokenshire Conservative, Hornchurch

I am grateful to the Minister for that explanation of the background and the requirements associated with the clause. In the light of her comments, I recognise the need for the provisions. My comments were really intended to gauge the background and to gain a full understanding of the requirements, and I made them in the spirit of seeking to avoid additional regulation where it is not required. However, I have listened carefully to the Minister’s comments about the problems that Companies House faces in dealing with new names and about the way in which things are changing, and I shall not be questioning the inclusion of the clause in the Bill.

Question put and agreed to.

Clause 58 ordered to stand part of the Bill.

Clause 59 ordered to stand part of the Bill.