Clause 78

Company Law Reform Bill [Lords] – in a Public Bill Committee at 1:45 pm on 22nd June 2006.

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Change of name by special resolution

Photo of James Brokenshire James Brokenshire Conservative, Hornchurch

I beg to move amendment No. 144, in clause 78, page 34, line 4, leave out from beginning to end of line 5 and insert—

‘(1A) Where a change of name by special resolution is unconditional, the requirement of subsection (1) shall be satisfied by forwarding a copy of the resolution to the registrar.'.

Photo of Eric Illsley Eric Illsley Labour, Barnsley Central

With this it will be convenient to discuss amendment No. 145, in clause 78, page 34, line 9, at end insert

‘and the company shall forward a copy of the special resolution to the registrar.'.

Photo of James Brokenshire James Brokenshire Conservative, Hornchurch

The clause provides the detail of what needs to be filed with the Registrar of Companies in the event of a company changing its name by special resolution. I note what the Minister said in the previous debate about the deregulatory approach, but the clause appears to impose an additional requirement on a company in respect of the change of name procedures.

A company need only forward a copy of the resolution, the requisite fee and a revised copy of its memorandum and articles of association in the event of a change of name, but the clause seems to require a new formal notice in addition. I can understand that where the resolution might be conditional—for example, when a company seeks to be listed on the stock exchange—a company might wish to change its name conditional on its shares being admitted to trading. Therefore, the resolution will not become active, or bite, until that condition is satisfied. In those circumstances, confusion might be caused with the Registrar of Companies as to whether the resolution is valid, hence the probable rationale for including the provision in the Bill.

However, when there is an unconditional resolution—for example, a simple proposal for a special resolution that the name of the company be changed to X Ltd.—I see no need for a formal notice as well as filing a copy of that resolution, which is the reason for tabling amendment No. 144.

Amendment No. 145, which is consequential, would ensure that in the circumstances of a conditional resolution, a copy of the resolution was filed, with an appropriate notice.

The amendments try to be as deregulatory as possible by not requiring an additional imposition on companies changing their names where that is not necessary, while recognising that the Registrar of Companies might be in difficulties in certain circumstances. Therefore, I understand where the original thought processes came from.

Photo of Vera Baird Vera Baird Parliamentary Under-Secretary, Department for Constitutional Affairs 2:00 pm, 22nd June 2006

We can only applaud the deregulatory purpose of amendment No. 144, but the Bill’s provision that the name change need not be by special resolution has a far greater deregulatory effect. The scheme of the Bill is to provide a simple system for notifying the change of name, whether or not it is done by special resolution. This will mean that changes of name will take effect more quickly than at present.

Under the current arrangements, Companies House needs to check every special resolution to see whether it includes a name change. That causes delays in processing that might lead to the mischiefs that we discussed this morning. Last year, 143,286 special and written resolutions were filed, of which 56,954 involved a change of name. Requiring this document to be sent in is a useful flag for Companies House showing that the name is being changed.

Amendment No. 144 would retain the existing arrangements for name changes by special resolution, which causes delays in processing because invariably special resolutions contain far more than just the change of name. It is Companies House’s experience that having to dig through a morass of other provisions in the resolution inevitably causes delay.

I hope that the hon. Gentleman will withdraw his amendment because, on balance, we are even more deregulatory than he is here, although I can see how at first sight it does not look that way. AmendmentNo. 145 would put in a requirement that a special resolution should be filed. I understand that that is already in clause 29 and the amendment would duplicate that requirement.

Photo of James Brokenshire James Brokenshire Conservative, Hornchurch

I find the Minister’s comments on delay a little surprising in that, under the existing arrangement, it is entirely possible to do a same-day change of name. I had the dubious pleasure of having to do that on many occasions before I entered the House, so I would be delighted if it is possible to do it even quicker under this regime, but I find that surprising.

I hear what the Minister says and I look forward to the express, hour-long, pick-it-up-as-you-wait procedure. It sounds an excellent proposal and I look forward to seeing that working in practice through the mechanisms of Companies House. However, given her comments, I beg to ask leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Clause 78 ordered to stand part of the Bill.

Clauses 79 to 81 ordered to stand part of the Bill.