Clause 122

Company Law Reform Bill [Lords] – in a Public Bill Committee at 12:15 pm on 27th June 2006.

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Single member companies

Question proposed, That the clause stand part of the Bill.

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

The clause relates to section 352A of the Companies Act 1985. Section 352A(1) has been developed by the insertion of clause 122(1), which requires a company at its formation to enter a statement on its register stating it to be a single member company. Section 352A refers only to a company whose quantity of members falls to one having to make a statement. As a result of amendments agreed in the House of Lords, clause 122 now refers to all limited companies. Section 352A referred only to private  companies. Lord Sainsbury explained that the amendment is a result of the company law directive. It requires that once a company becomes a single member company, whether public or private, it should be recorded.

I believe that there may be some element of European law which is the root of all of this. Perhaps the Minister could explain. To our mind, this is patently an unnecessary clause. If there is only one shareholder on the register that is a self-evident fact seen by looking at a copy of the register. What is the purpose conceptually of the clause and why is having one shareholder, rather than two or three, going to be of concern to anyone?

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

Again, I am going to have to write to the hon. Gentleman.

Question put and agreed to.

Clause 122 ordered to stand part of the Bill.

Clause 123 ordered to stand part of the Bill.