Clause 76

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

Alert me about debates like this

Misleading indication of activities

Photo of James Brokenshire James Brokenshire Conservative, Hornchurch

I beg to move amendmentNo. 140, in clause 76, page 33, line 9, after ‘public', insert

‘or a section of the public'.

Photo of Eric Illsley Eric Illsley Labour, Barnsley Central

With this it will be convenient to discuss amendment No. 141, in clause 76, page 33,line 10, at end insert

‘A direction under this section must be in writing.'.

Photo of James Brokenshire James Brokenshire Conservative, Hornchurch

I will not speak to amendment No. 141, because of the assurance given by the Minister. However, amendment No. 140 is on a slightly different subject. Clause 76 provides a mechanism whereby if a misleading indication is given as to the nature of the activities of a company and it is

“likely to cause harm to the public, the Secretary of State may direct the company to change its name.”

The amendment is intended to clarify the use of the words “the public”. When looking through the Bill, I asked myself what would happen if only a section of the public were harmed—for example, the elderly or another vulnerable group.

In other companies legislation a distinction can be drawn between the public and a section of it. While the language in the clause repeats that in section 32(1) of the 1985 Act, the Bill gives us the opportunity to ensure that we adequately and properly address the problem. We are considering activities likely to cause harm, and even if harm is caused to only a section of the public, it is still harm. I appreciate that there is a balance to be drawn and that the amendment may not be as precise and elegant as it would need to be, but the point is still valid and worth further examination to ensure that we are clear as to when an order should be given. We must ensure that a person subject to such an order is not given the right to make a legal challenge by saying, “Well actually, we are not affecting the public. We are only affecting a section of the public.” That would clearly not be in the public interest, so it is worth examining.

Photo of Vera Baird Vera Baird Parliamentary Under-Secretary, Department for Constitutional Affairs 1:45 pm, 22nd June 2006

The hon. Gentleman does himself a disservice—this is an elegant amendment, except that we do not think it necessary. I understand the underlying concern, which he set out plainly, but the criterion

“likely to cause harm to the public” does not require the whole population to be in danger. “Public” means anyone not related to the company.

The problem with the amendment is that it suggests that a risk must be either to all those or to a group—a section of the public—who share a characteristic, such as the elderly or the vulnerable, for example, as he said, that distinguishes them from the rest of the public. As the provision is drafted, all that would be required to trigger the power in the clause is the risk of harm to a substantial number of people, whether or not they could be described as a section of the public, according to the hon. Gentleman’s definition.

I hope that the hon. Gentleman is reassured and is able to withdraw the amendment. He is entirely right about amendment No. 141 and we will consider it, as we offered to do in relation to an earlier amendment.

Photo of James Brokenshire James Brokenshire Conservative, Hornchurch

I thank the Minister for her comments. My amendment is intended not to limit scope, but to add clarity and afford protection to, for example, a vulnerable group being misled by how a company describes itself, and to allow the Secretary of State to act in such circumstances.

I hear what the Minister says about significant numbers of people. Perhaps that underlies my concern about the meaning of a “significant” number of people. It might mean a significant number of people covering all sorts of groups from the young to the very old. It might also mean a particular section of the public being targeted by a misleading term. I want to be clear about whether that is covered by the clause.

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

It is pretty clear that a “section of the public” will not cease to be part of the public because it has a particular characteristic. I think that that is the reassurance the hon. Gentleman seeks.

Photo of James Brokenshire James Brokenshire Conservative, Hornchurch

I thank the Minister for her intervention. The amendment has been tabled because “the public” and “section of the public” are legislative concepts; it would cover both angles and ensure sufficient protection. It is not fanciful, and this is a contextual use that has cropped up in other legislation. I call to mind the securities legislation in which an offer to “the public” can be made. However, a further distinction is drawn about what “the public” means. In that context, it means 50 people, potentially. I seek clarity. I see that the Minister might have some further information.

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

I hope that I can help because I agree that that is an important point. Yes, there can be a difference. In some contexts, “section of the public” is the right terminology, but the Bill is clear that the public are harmed if anybody unconnected with the company is harmed.

Photo of James Brokenshire James Brokenshire Conservative, Hornchurch

I thank the Minister for her further clarification on that point. In the light of her additional comments, I beg to ask leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Clause 76 ordered to stand part of the Bill.