Clause 112

Company Law Reform Bill [Lords] – in a Public Bill Committee at 3:30 pm on 22nd June 2006.

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Photo of Jonathan Djanogly Jonathan Djanogly Shadow Minister (Business, Innovation and Skills), Shadow Solicitor General, Shadow Minister (Justice), Shadow Solicitor General

I beg to move amendment No. 23, in clause 112, page 50, line 17, after ‘addresses', insert

‘(which, for the avoidance of doubt, need not be a home address)'.

The clause relates to section 352 of the Companies Act 1985. Later I shall speak more fully on the problems caused by access to home addresses on the register of members. At this point, it is worth clarifying that there is no need to use a home address on a share transfer form or in the register of members. A service address can be used, such as that of a person’s accountant, bank or post office. Of course, having the name appear on the register, whatever the address, can create its own problems, particularly if the name is a rare one, which is why the ability to deny access is important, as we shall discuss later.

I would like to receive the Minister’s confirmation of one aspect of the matter. The July 2002 consultation document, “Regulatory Impact Assessment on Disclosure of beneficial ownership of unlisted companies” noted that the current registration system does not reveal any information regarding the beneficial ownership of shares. For that reason, the document noted, attempting to establish the ownership of the company by referring to the register has its limitations, as there is no means of discovering who beneficial shareholders are. To solve that problem, those responsible for the RIA were asked to consider a proposal put forward by the DTI and HM Treasury that a person must disclose to a private company, once their beneficial interest in shares exceeds 3 per cent.. The company would then be obliged to enter those details on a subsection of the register of members. Will the Minister confirm that that proposal will not now be proceeded with?

I would also appreciate the Minister’s clarification on a slightly different topic, which was raised in the Lords. I tabled a written question, to which I received a reply on 2 May. I asked:

“How many registered companies have issued stock?”

The response that I received from the then Minister was:

“Section 121(c) of the Companies Act 1985 permits a company to convert any or all of its paid-up shares into stock, and reconvert that stock into paid-up shares of any denomination. There are no available figures on the number of existing, registered companies that have used that procedure. However, the ability to convert shares into stock is to believed to be obsolete.” —[Official Report, 2 May 2006; Vol. 445, c. 1365W.]

Can we not now just get rid of stock?

Photo of Margaret Hodge Margaret Hodge Minister of State (Industry and the Regions)

On the last point, I asked the same question in preparation for various clauses in the Bill. I was told that while it was obsolete, we could not guarantee that there was none still around. We have to carry on with the provisions until we are certain that it has all disappeared from the face of the Earth. I know, it is one of those awful things. On the first point, I assure the hon. Gentleman that we are not proceeding with the proposal to which he alluded.

I will speak generally to amendment No. 23, which I think is similar to one that was tabled in another place. One way in which members of a company may wish to protect themselves against attempts to harass or defraud them is by giving the company a service, rather than a home, address. That is already possible. However, on Third Reading in the other place, when a number of amendments were made to part 8, which deals with company members, specific provision—clause 793—was inserted to draw attention to the point. As hon. Members know, clause 793 provides that

“Any obligation under the Companies Acts to give a person’s address is, unless otherwise expressly provided, to give a service address for that person.”

We recognise the importance of those matters, but we doubt that the addition of a second provision for the avoidance of doubt would serve any useful purpose. I hope on that basis, the hon. Member will withdraw his amendment.

Photo of Jonathan Djanogly Jonathan Djanogly Shadow Minister (Business, Innovation and Skills), Shadow Solicitor General, Shadow Minister (Justice), Shadow Solicitor General

On the basis that the Minister has explained where the provision is—somewhat later on in the Bill—I am happy to beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Photo of Eric Illsley Eric Illsley Labour, Barnsley Central

May I clarify with the hon. Gentleman, he referred to questions of stock in his remarks on amendment No. 23. Does he intend to move amendment No. 67?

Clause 112 ordered to stand part of the Bill.