Companies Act 2006 (Part 35) (Consequential Amendments, Transitional Provisions and Savings) Order 2009

The draft statutory instruments which we are debating this afternoon are an important part of our implementation of the Companies Act 2006. The Act reformed and clarified company law in many areas and brought company legislation together in one place. The Act makes it easier to set up businesses, gives investors greater information and confidence, and promotes shareholder engagement and effective dialogue between business and investors. The Act has been implemented in stages and these statutory instruments relate to provisions which are due to come into force in October 2009. This staged approach gave companies time to prepare, allowed us to coincide changes with parallel EU requirements and allowed Companies House to update its systems to support the new measures. The first debate concerns two statutory instruments relating to the Registrar of Companies. The basic functions of the registrar are set out in Part 35 of the Companies Act 2006. This largely replaces the relevant provisions of the Companies Act 1985, but it provides new powers and duties for the registrar which will help Companies House maintain the register as a useful and accurate source of information for users. The draft Registrar of Companies and Applications for Striking off Regulations supplement Parts 31 and 35 of the Act by making more detailed provision in four areas: rectification of the register, annotation of the register, language requirements and an application by a company to have its name struck off the register. The registrar does not currently have any statutory powers to remove information from the register, although the registrar will remove material if a court order authorises it. It was recognised on both sides of this House during the passage of the Bill that more needs to be done to address the filing of inaccurate, forged or fraudulent information on the register. The Companies Act 2006 introduces two new statutory procedures requiring the registrar to rectify the register—that is, to remove material from the register under court order or under a new administrative procedure on application to the registrar. The new administrative procedure has been introduced to permit certain information to be removed from the register without a court order. It is, we believe, an important step towards a more accurate register, although I should make it clear that it is not a panacea, and that matters requiring adjudication of competing claims should be left to the courts. Under the draft regulations, it will be possible for an applicant to seek removal of company officers’ details from the register. Companies House will follow the procedure set out in the regulations and, if no objection is received, the material will be removed. It will also be possible for companies to seek removal of material relating to changes to a company’s registered office address. We believe that the way in which the provisions of the 2006 Act are framed in relation to a company’s registered office and the grounds for rectification effectively precludes the possibility of an applicant, other than a company, making an application in respect of a registered office address and prevents the administrative procedure being used at all in respect of a registered office address provided on incorporation of the company. An earlier draft of the regulations was withdrawn in the light of fresh evidence that some companies were purportedly appointing directors without the consent or knowledge of the persons concerned. The earlier draft addressed this issue where there was a change of directors in an established company, but the revised regulations address it also where directors are purportedly appointed when a company is first set up. We are very conscious that the provisions of the Act and the draft regulations do not provide a full answer to issues relating to the accuracy of the register, particularly where the company has provided fraudulent information. We will consider these matters further and if solutions can be identified, we are minded to consult on possible changes to the law in this area, including to the 2006 Act in due course. The second area where the draft regulations make more detailed provision is annotation of the register. They authorise the registrar to annotate the register where he believes that any material is misleading or confusing. The Act contains rules about the language in which documents can be drawn up and delivered to the registrar under company and insolvency legislation. The basic rule is that they must be drawn up and delivered in English. This does not apply to Welsh companies, which can deliver documents in Welsh so long as they are accompanied by an English translation. The draft regulations relax this exception further, prescribing documents relating to certain Welsh companies that can be delivered to the registrar in Welsh without a certified translation into English. The draft regulations also add further documents to the list of documents in the 2006 Act that can be delivered to the registrar in a language other than English, provided that they are accompanied by a certified translation into English. They also provide the characters and symbols that are permitted in names and addresses. Finally, the draft Registrar of Companies Regulations require an application by a company to have its name struck off the register to contain a declaration that there are no circumstances as set out in Sections 1004 and 1005 that prevent the application being made. It is important to Companies House and very helpful to business to have a coherent and consistent registration system for all types of business which are required to send material to Companies House. It has therefore always been our intention to apply provisions of Part 35, relating to the Registrar of Companies, to forms of business association other than companies. Some provisions already apply generally to companies and other bodies, but others, such as certain provisions relating to electronic delivery, must be applied to other bodies to provide a coherent system. It would be possible to do this by making consequential amendments to each individual area of law, but we believe that the legislation will be clearer and simpler if we amend Part 35 to achieve this. The draft Companies Act 2006 (Part 35) (Consequential Amendments, Transitional Provisions and Savings) Order will give effect to this. I should make it clear that the amendments made by the draft order are relatively modest in their impact, being concerned essentially with procedural and administrative matters. The draft order does not seek to extend all the provisions of Part 35 and does not seek, for example, to extend the provisions about correcting or removing material on the register. These instruments will make an important contribution to our efforts to make the register a useful and accurate source of information for users. I commend them to the Committee. I beg to move.