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Public Bill Committee Debates

Draft Companies (Trading Disclosures) Regulations 2008

The Committee consisted of the following Members:

Chairman: Mrs. Janet Dean
Burt, Lorely (Solihull) (LD)
Clappison, Mr. James (Hertsmere) (Con)
Dobbin, Jim (Heywood and Middleton) (Lab/Co-op)
Duddridge, James (Rochford and Southend, East) (Con)
Hill, Keith (Streatham) (Lab)
Jones, Lynne (Birmingham, Selly Oak) (Lab)
Naysmith, Dr. Doug (Bristol, North-West) (Lab/Co-op)
Pound, Stephen (Ealing, North) (Lab)
Purchase, Mr. Ken (Wolverhampton, North-East) (Lab/Co-op)
Robinson, Mr. Geoffrey (Coventry, North-West) (Lab)
Seabeck, Alison (Plymouth, Devonport) (Lab)
Shepherd, Mr. Richard (Aldridge-Brownhills) (Con)
Simmonds, Mark (Boston and Skegness) (Con)
Simpson, Alan (Nottingham, South) (Lab)
Streeter, Mr. Gary (South-West Devon) (Con)
Teather, Sarah (Brent, East) (LD)
Thomas, Mr. Gareth (Parliamentary Under-Secretary of State for International Development)
Keith Neary, Committee Clerk
† attended the Committee

Fifth Delegated Legislation Committee

Wednesday 6 February 2008

[Mrs. Janet Dean in the Chair]

Draft Companies (Trading Disclosures) Regulations 2008

2.30 pm
The Parliamentary Under-Secretary of State for Business, Enterprise and Regulatory Reform (Mr. Gareth Thomas): I beg to move,
That the Committee has considered the draft Companies (Trading Disclosures) Regulations 2008.
Before I begin, may I express what I am sure is the universal opinion of Committee members and say what a pleasure it is to serve under your chairmanship, Mrs. Dean? The regulations will ensure that the legal identity of a company is made known to all who have, or wish to have, dealings with it. They also ensure that those wishing to inspect a company’s records or to serve a document on a company can find the right premises. They cover company communications and signs at company premises, and they replace the requirements not only in the Companies Act 1985, but in the Business Names Act 1985 and the equivalent Northern Ireland legislation that applies to UK companies.
Any company that carries on business under a name other than its registered name is subject to disclosure requirements under both Acts. The new requirements are similar but not identical to those requirements, and the regulations will help to remove the confusion arising from two sets of rules. There will be some changes to the requirements relating to company documents. In particular, companies will have to include their names in all forms of business correspondence and documentation, not, as at present, just in those that are listed. The list has been expanded to include, for example, orders for services, because at present, the Companies Act 1985 requires the company’s name to be included only in orders for money or goods, not in orders for services, so the regulations will correct that anomaly. The list also includes all written demands for payment—not, as at present, invoices alone—and it further includes applications for licences to carry on a trade or activity.
For companies that are subject to the Business Names Act 1985 or the Northern Ireland equivalent, the regulations mean that they will no longer be obliged to include an address in the United Kingdom for the service of documents in their receipts, invoices and other demands for payment. On signs, there are no new requirements for any companies. No company that is fully compliant with the current law will have to make any changes whatever to the signs at its premises. The regulations are less burdensome than the existing requirements, particularly for any company that carries on business under a name that is not its registered name.
2.33 pm
Mr. James Clappison (Hertsmere) (Con): Mrs. Dean, may I join the Minister in saying what a great pleasure it is to serve under your chairmanship? We support the underlying and long-established objective of the regulations. I understand that they are subject to the affirmative resolution procedure, but we agree that it is important, as the Minister said, for the legal identity of every company to be revealed to all who have, or wish to have, dealings with it. Transparency is important for companies, and it should apply to documents, including business letters, order forms, websites, company premises and registered offices. We accept that changes in the world such as the advent of electronic communication mean that regulations must be updated from time to time, but we hope that the regulations become settled and do not change for some time, because it is in everybody’s interest to understand the system generally, and for the system not to change constantly.
The regulations were subject to consultation, and we note its outcome. It was not an earth-shattering consultation, and I wish to ask only one question. Given the underlying objective of transparency, which we share, what is the position of an overseas company that is not incorporated either in this country or in a European Union member state? How do the requirements of disclosure in the regulations relate to such an overseas company?
2.35 pm
Sarah Teather (Brent, East) (LD): May I, too, welcome you to the Chair, Mrs. Dean? I have just one question for the Minister—I have no other issues with the statutory instrument—that relates to page 11 of the explanatory notes, which states that there is an intention to introduce further exemptions relating to directors’ home addresses. When those exemptions are made, there will be a similar exemption for company names if there is a possibility of violence against those companies. I should like to know when that exemption is going to made, because the statutory instrument is going to come into effect on 1 October, and companies will be in difficulty if they try to make sure that they comply with the regulations before 1 October while not knowing whether or they will secure an exemption. That applies, for example, to Huntingdon Life Sciences and other companies where there is a risk of violence against people who work for the organisation. I should like an assurance from the Minister that the exemption regulations will be introduced before 1 October, and I would be grateful for an indication of when they will be made.
2.36 pm
Mr. Thomas: I shall try to give reassurance on the questions I have been asked. May I tell the hon. Member for Hertsmere that we, too, want the regulations to represent a settled pattern? As I made clear in my opening remarks, for those companies that are completely compliant with the law, there will be no requirement for fundamental change. As he said, there was a consultation to check with business its view of the situation. One issue that emerged was the problem to which the hon. Member for Brent, East referred. She used the example of Huntingdon Life Sciences, but another example is someone who sells diamonds from their home, and their home address is not the company’s registered office.
In response to the specific question asked by the hon. Member for Hertsmere asked about the position of overseas companies in relation to trading and disclosures, there are requirements for all such companies in the regulations. We will tailor the requirements on those overseas companies, but they are included in the measure. The hon. Member for Brent, East asked about exemptions. From 1 October 2009, the exemption for sensitive premises will be introduced. We are conscious of the need to move as quickly as possible, but I hope that she recognises that we need to give certainty to business about the time scale. I am sure that everybody wants to move as quickly as possible, but that is the point at which we will introduce the exemption.
Sarah Teather: I am a little concerned by the Minister’s answer, because the regulations come into play on 1 October 2008. Companies will be required to label any place where they undertake business between now and 2009. Once the exemptions come into force, they can remove those signs, but it will be too late at that point, and some businesses will have to move offices. It is not satisfactory to introduce the regulations, followed by the exemptions a year later.
Mr. Thomas: I accept the hon. Lady’s concern, and without doubt consideration will be given to complaints about the exemption and the time scale. Companies are already required to provide signs at their premises, so any company that complies with the law at the moment will not have to fundamentally change its work patterns. The hon. Lady asked a specific question about the time, and I have given her details of when that exemption will come into force.
Question put and agreed to.
Committee rose a t twenty one minutes to Three o’ clock.

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