Clause 74

Company Law Reform Bill [Lords] – in a Public Bill Committee at 1:30 pm on 22nd June 2006.

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Appeal from adjudicator’s decision

Photo of James Brokenshire James Brokenshire Conservative, Hornchurch

I beg to move amendmentNo. 63, in clause 74, page 32, line 11, leave out subsection (3).

The clause deals with appeals from a company’s named adjudicator to the court. Subsection (3) deals with suspending the adjudicator’s order on appeal. The problem is highlighted by the CBI, which says:

“There should not be an automatic suspension of the adjudicator’s order on appeal...Otherwise this sub-clause is an encouragement to appeal and to continue trading under an offending name, damaging the applicant’s goodwill even further.

Rather, it should be open to the respondent to seek a court order suspending the order, as it should be open to an applicant to seek an order preventing the respondent company from  trading under the name until the questions concerning the abuse by the respondent have been settled.”

I note that the matter was highlighted in another place. Lord McKenzie of Luton was not persuaded by a similar argument. He suggested that the concerns were unfounded, on the basis that registering a name does not confer a right to trade. If a company were forced to change its name immediately, someone else might take the name.

It is worth considering some of his specific comments in Grand Committee. Lord McKenzie said:

“If a company had to change its name immediately, its name might then be taken by anyone else. In particular, it is likely that the applicant would wish to register the name, if only as a precautionary measure. This means that the company would have lost the name even if the court were to reverse the adjudicator’s decision.”

He also said:

“the fact that the company has registered a particular name does not confer a right to trade under it.”—[Official Report, House of Lords, 1 February 2006; Vol. 678, c. GC121-22.]

I hear what the noble Lord said, but on the point about immediate change, there is surely a risk that that would happen in all circumstances covered by clause 70. If an order were made, a company would clearly want to protect its position immediately. How would that mechanism work? I was not persuaded by his comment.

We are not talking about trading names but corporate names. There is a fundamental distinction. For that reason, I tabled the amendment suggested by the CBI. I look forward to the Minister’s response.

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

The hon. Gentleman correctly quotes my noble Friend and more or less correctly quotes his noble Friend—

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

Indeed, and for no particular reason, as far as I can see.

The amendment is misconceived. Its effect would be that even if a company’s appeal were successful, it could well be impossible for it to have the disputed original name as somebody else might have taken it. That is not a fanciful idea because it would be the sensible thing for the other party to do in the meantime. That would be wholly inequitable.

Photo of James Brokenshire James Brokenshire Conservative, Hornchurch

I moved the amendment because the problem has again been highlighted by the CBI, so it is clearly of concern. While I recognise that we are covering ground that may have been covered before in another place, if something is of concern it is the duty of the Opposition to continue to highlight it in Committee. I note what the Minister said, but it is our duty to ensure that problems are properly highlighted. Although they have been discussed in another place, it is still important that we have an opportunity to debate them after reflecting on the changes that were made to the Bill there and in the context of debates on Second Reading in this House. While I note that the Minister is  not prepared to give ground, it is important that we retain that opportunity and that I do not feel fettered in raising issues that have been raised elsewhere. I beg to ask leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Clause 74 ordered to stand part of the Bill.

Clause 75 ordered to stand part of the Bill.