Overseas Companies Regulations 2009

My Lords, the first question was a minority view, so to speak, as I understood the noble Lord, Lord De Mauley. Responses to each of the consultations on a simplified single regime for overseas companies consistently supported the approach. Almost all respondents supported the regime as set out in the draft regulations set out in December 2007, which was based on the concept of an overseas company with a UK establishment. Key stakeholders have continued to be involved in the finalisation of the draft regulations and have continued to support the concept of a single regime. It seems to be pretty well supported. Impact assessment can be justified by the savings. The net saving of £4.9 million is measured in terms of new overseas companies registering a UK establishment under the new regime. It is rather difficult to quantify one of the main benefits of the regime, which is that these companies no longer have to decide whether their establishment in the UK is a place of business or a branch. This element of choice and the time and effort required will vary from company to company. The PwC assessment of costs to business of UK regulation did not include an assessment of this choice. We believe that the simplification of the regime is a major customer benefit, and it is unfortunate that this saving cannot be counted. Instead, we have been able to quantify the benefit to companies of following the new simplified accounting regime and avoiding the existing Section 700 accounts requirements. PwC assessed the cost of preparation of such accounts to be just under £885 per company. Many overseas companies will now be in a position to avoid this cost by filing accounts already prepared under the parent law of their country of incorporation. We have taken an indicative view that half the overseas companies that could benefit from this change will do so. It is difficult to be more accurate, given the range of countries involved, and the saving could be higher. Those companies unable to rely on parent law and still required to prepare accounts will find the new arrangements more straightforward, and we have estimated an average reduced cost of half that for Section 700 accounts assessed by PwC. We based the saving on the number of active overseas companies registered at Companies House that are non-EU companies with a UK branch or overseas companies with a place of business. EU companies with a UK branch are not subject to Section 700 accounts, so we have not counted them in the saving calculation. For some existing overseas companies, there will be negligible increased cost. The regulations include transitional provisions that allow existing companies sufficient time to provide a set of accounts where they have not already been provided. Other information to be provided as part of the transition is negligible. We have allowed companies six months from 1 October 2009 to comply with a simple return to the registrar. Respondents to the December 2007 consultation did not challenge the figures used, nor did they offer any alternative approach. On the contrary, the majority supported the approach taken. In response to the noble Lord, Lord Razzall, accounting by non-EU companies has been modernised, not liberalised. It will be easier for creditors because the resulting accounts will follow more modern accounting standards—so I am assured. I think that we have dealt with all the questions raised. Motion agreed.