Clause 60

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

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Private limited companies

Photo of James Brokenshire James Brokenshire Conservative, Hornchurch

I beg to move amendment No. 124, in clause 60, page 23, line 34, leave out subsections (1), (2) and (3) and insert—

‘(1) Subject to section 61, the name of a limited company that is a private company must end with “limited” or “ltd” or, in the case of a Welsh company, its name may instead end with “cyfyngedig” or “cyf.”.'.

Photo of Eric Illsley Eric Illsley Labour, Barnsley Central

With this it will be convenient to discuss amendment No. 125, in clause 60, page 24, line 1, leave out from ‘companies' to end of line 3.

Photo of James Brokenshire James Brokenshire Conservative, Hornchurch

The clause requires that private limited companies use a particular suffix to denote their status, and the amendments are intended to simplify it. In the days when I was learning how to draft contracts and other legal documents, I was always told not to use three words when one would do. Applying that logic and that adage to the clause, I wonder why we should use three subsections when one will do, particularly when the Bill is intended to simplify company legislation and slim down what might otherwise be an excessive burden of regulation. Amendment No. 124 is largely a drafting amendment to give effect to that approach.

Amendment No. 125 is slightly different. Although I welcome the introduction of greater cross-referencing in the Bill, I do not welcome the fact that it sometimes adds confusion. Subsection (4) says that the clause

“does not apply to community interest companies”,

but then invites the reader to see certain sections of the Companies (Audit, Investigations and Community Enterprise) Act 2004. That leaves the reader in some confusion as to whether community interest companies are caught or not. Amendment No. 125 would make the position definitive, but if it is not acceptable to the Minister, I hope that she will consider an alternative formulation of subsection (4) to ensure that there is some clarity about the scope and ambit of the clause.

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

The existing clause is a very clear statement of the requirement for a private company’s name to end in the appropriate statutory indicator of its status. The formulation is the same as that in the previous clause, which applies to public companies’ names. I hesitate to agree to an amendment that just restates the existing clause, which is what it does. I can compete with the hon. Gentleman on the verbiage point; personally, I find the hon. Gentleman’s sentence of 38 words less easy to understand than three sentences of no more than 17 words. I hope that he is persuaded that I have the trump card, that there really is not much point in amendment No. 124, and that he should withdraw it.

On amendment No. 125, I can almost see the hon. Gentleman’s point, but not quite. As he says, all that it does is to remove the cross-reference to the Companies (Audit, Investigations and Community Enterprise) Act 2004. It does not change the position at all; it just deletes a useful cross-reference. Since the provision in the 2004 Act requires the name of a community interest company that is not a public company to end in CIC, I would have thought it quite useful, at this point of the Bill, to have a pointer across to another piece of legislation. I am a bit hopeful that I have persuaded him to withdraw that amendment, too.

Photo of James Brokenshire James Brokenshire Conservative, Hornchurch

I thank the Minister for her comments, and although I hear what she says, there is the risk of some confusion; that is why I tabled amendments Nos. 124 and 125. However, given the time and the need to move on to other—perhaps more pressing and significant—matters, I shall not put my amendments to a vote. I beg to ask leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Clause 60 ordered to stand part of the Bill.

Clause 61 ordered to stand part of the Bill.