Company, Limited Liability Partnership and Business Names (Sensitive Words and Expressions) Regulations 2014
Draft Company, Limited Liability Partnership and Business (Names and Trading Disclosures) Regulations 2014
The Committee consisted of the following Members:
† Colvile, Oliver (Plymouth, Sutton and Devonport) (Con)
Doran, Mr Frank (Aberdeen North) (Lab)
† Doughty, Stephen (Cardiff South and Penarth) (Lab/Co-op)
† Ellis, Michael (Northampton North) (Con)
† Kaufman, Sir Gerald (Manchester, Gorton) (Lab)
† Kwarteng, Kwasi (Spelthorne) (Con)
† Maynard, Paul (Blackpool North and Cleveleys) (Con)
† Neill, Robert (Bromley and Chislehurst) (Con)
Pearce, Teresa (Erith and Thamesmead) (Lab)
† Randall, Sir John (Uxbridge and South Ruislip) (Con)
† Reevell, Simon (Dewsbury) (Con)
Simpson, David (Upper Bann) (DUP)
† Stride, Mel (Central Devon) (Con)
† Stringer, Graham (Blackley and Broughton) (Lab)
† Swinson, Jo (Parliamentary Under-Secretary of State for Business, Innovation and Skills)
† Vaz, Valerie (Walsall South) (Lab)
† Ward, Mr David (Bradford East) (LD)
† Wright, Mr Iain (Hartlepool) (Lab)
Oliver Coddington, Committee Clerk
† attended the Committee
First Delegated Legislation Committee
Monday 5 January 2015
[Mr Christopher Chope in the Chair]
Company, Limited Liability Partnership and Business Names (Sensitive Words and Expressions) Regulations 2014
4.30 pm
The Parliamentary Under-Secretary of State for Business, Innovation and Skills (Jo Swinson): I beg to move,
That the Committee has considered the Company, Limited Liability Partnership and Business Names (Sensitive Words and Expressions) Regulations 2014 (S.I. 2014, No. 3140).
The Chair: With this it will be convenient to consider the draft Company, Limited Liability Partnership and Business (Names and Trading Disclosures) Regulations 2014.
Jo Swinson: May I wish you a happy new year, Mr Chope? It is, as ever, a great delight to serve under your chairmanship.
I would like to draw the Committee’s attention to the fact that the sensitive names regulations are subject to a special parliamentary procedure that means that they must be approved within 28 days of being made, which is why we are debating them at the earliest possible opportunity after the Christmas break.
The regulations that we are considering today apply to companies, limited liability partnerships and businesses. Together, they will offer those entities increased flexibility when choosing their name. They consolidate current name and trading disclosure regulations and remove some of the burdens on business in the current regulations. I am sure that all members of the Committee will agree that anyone who sets up a business should be concentrating on running and growing that business and should not have to deal with unnecessary red tape associated with the name that they wish to give to it.
However, it is important that there are some rules associated with the chosen name. It is important, for example, that companies do not have the same name as, or too similar a name to, one already in use. There is also the need to ensure that the name does not convey something that could mislead the general public. That could happen if the name suggested pre-eminence in a particular area or a level of endorsement from respected authorities. Therefore, the regulations are intended to strike a balance between ensuring sufficient protections for the public and removing red tape associated with company names and offering a flexible framework for company law.
The Company, Limited Liability Partnership and Business Names (Sensitive Words and Expressions) Regulations 2014 list the words and expressions that are considered “sensitive” under the Companies Act 2006 and therefore will require approval from the Secretary of State before they may be used in a name. Following
the expression of views in response to the company and commercial law red tape challenge, we launched a formal consultation on company names that asked whether it was necessary to continue to have regulations specifying words and expressions that were deemed sensitive and therefore would need approval before being used in a name, and, if so, whether the current list of sensitive words and expressions should remain the same or could be reduced.All the responses supported the retention of a sensitive words list, as they agreed that some words could mislead the public into thinking that the company might have a pre-eminence, a particular status or functions that other parties might rely on. However, there was also broad support for reviewing the words currently regulated and agreement that reducing the number of words subject to controls would be beneficial to business.
As a result of the company and commercial law red tape challenge, we are reducing the number of sensitive words on the list by 26. Those words will be able to be used in a company name without the need for extra checks or supporting evidence. To give the Committee some examples, the words “national”, “holding” and “international” are being removed from the list of sensitive words. The 26 words that we are removing accounted for more than 25,000 of the 36,840 applications to use a sensitive word in 2013-14, so we are talking about a significant reduction in the number of applications that will need to be made.
When deciding which words to remove from the list, we considered a wide range of issues, including the number of applications received over a period, whether approval to include the word was normally granted and the likely impact on the public should the word or expression be removed from the list. I am confident that the words that we are removing will not have a negative impact on the public if they are included in a company, LLP or business name without a check by Companies House. Any proposed company name that includes one of the words or expressions that will still be specified must have the approval of the Secretary of State. Approval is granted by the registrar of companies at Companies House on behalf of the Secretary of State. Furthermore, in some cases the views of other specified bodies must also be sought in connection with an application for a name containing a sensitive word or expression. For example, to use the word “bank”, a company would need to have the support of the Financial Conduct Authority.
The majority of the content of the draft Company, Limited Liability Partnership and Business (Names and Trading Disclosures) Regulations 2014 is merely a consolidation of five current statutory instruments relating to company names and trading disclosures. Trading disclosures are the information that a company must make available when communicating with third parties. Responses to the consultation offered support for merging the regulations. Consolidation should make it easier for people who are advising companies or complying with the regulations.
However, the measure does more than restate the previous regulations. It makes some technical changes to the rules determining whether one company name is to be considered the same as another, and it extends the characters that can be used in a company name. A company will now be able to use a wider variety of
characters, including accents and diacritical marks, in its registered name. That could prove interesting for Hansard. We have been able to make the change because of advances in technology, which will enable Companies House to accept and process the additional characters. The change acknowledges that the UK registers many companies that operate on an international basis. Companies may understandably want their names to reflect that.Stephen Doughty (Cardiff South and Penarth) (Lab/Co-op): I have a technical question about the use of the Welsh language and Gaelic. A number of words in those languages are specified, and I wondered whether the views of the Welsh language commissioner were sought about the changes, and whether she provided any advice.
Jo Swinson: I will be happy to respond to my hon. Friend in full on that point when I sum up.
Mr Iain Wright (Hartlepool) (Lab): Hon. Friend? We are not a coalition!
Jo Swinson: I mean the hon. Gentleman. It is just after Christmas and I am getting back in the swing of things.
We undertook a thorough consultation and engaged with the devolved Administrations. Obviously there was interest from those bodies in some of the words on the sensitive list. The words “Scotland” and “Wales”—and indeed “England”—remain on the list of sensitive names, and that was keenly felt in the various countries of the UK. We looked in detail at various Welsh language words, some of which are being removed and some retained.
Sir John Randall (Uxbridge and South Ruislip) (Con): As far as I can see, two place names are listed in the long list of specified words and expressions in part 1 of schedule 1 to the sensitive words and expressions regulations. One is Windsor, which I think is because of its connotations with the royal family, and the other is Sheffield. Why only those?
Jo Swinson: As the lists have already been in place, those are not newly included words. I hesitate over the history, in case what I say is not 100% accurate, but I suspect that the Windsor connection may be as my right hon. Friend suggests, and the Sheffield connection may be to Sheffield steel, which the city has long been proud of. [ Interruption. ] My right hon. Friend asks from a sedentary position why not Axminster, and that is a fair question. We were endeavouring to reduce the names on the list, rather than adding to them, but in the consultation we received strong representations that the names in question should be retained on the list. We do not, however, propose to add a long list of place names. I am sure that my right hon. Friend will welcome that as being in the deregulatory spirit of the regulations, but I commend him on his attention to detail.
On the point raised by the hon. Member for Cardiff South and Penarth about the Welsh language commissioner, the full list of those who responded is available online. There was no specific contact with the commissioner, but clearly it was possible for her to see the consultation and make any concerns known.
The second set of regulations also makes a change to trading disclosure requirements. It is usual for a number of companies to be registered at one location. If six or more companies share one location, the current requirement is for each name to be displayed continuously for 15 seconds, at least once every three minutes. We are relaxing that requirement so that if there are six or more companies at one location a list of their names may instead be made available on request. That is a small change, but I think that it will be less burdensome for businesses in such instances.
There are also a number of changes being made when considering whether a company name is the same as another existing one. The changes will also allow a group of companies to swap the names within their group structure more easily. That matter was highlighted by businesses that felt that the current regulations were particularly unhelpful in such circumstances.
Furthermore, a number of common words such as “group”, “holdings” and “international” will no longer be disregarded in comparing names. That means that “Butchers Holdings Ltd” will no longer be considered the same as “Butchers Ltd”, making it easier to register such a name if the other is already registered. Together, the changes will offer companies much more flexibility. I hope that hon. Members agree that the regulations strike the right balance between protecting the public and allowing companies more flexibility to choose a name that they believe best reflects their business. The regulations will reduce the red tape that companies currently have to cut through, and I commend them to the Committee.
4.40 pm
Mr Iain Wright: It is a pleasure to serve under your chairmanship so early in the new year, Mr Chope. I wish you, and indeed all members of the Committee, a happy new year. My new year’s resolution is to ensure that I am responding to delegated legislation debates from the Government side of Committee Room 9 by the end of the year, rather than from the Opposition side. I am fairly confident that I will be. [Interruption.] Perhaps we will not have a Division on that quite yet.
The regulations are relatively non-contentious, but I have a number of questions. I turn first to the regulations relating to names and trading disclosures. Consolidating the statutory instruments relating to company, LLP and business names into as few regulations as possible seems a sound premise, and is something that the previous Labour Government were doing in regulations introduced in 2008 and 2009. The regulations before us continue that work. Indeed, the 2008 regulations brought in a single regime for trading disclosures, which seemed sensible. Extending the list of characters that can be used in a company name, as this statutory instrument does, reflects the modern age and up-to-date business practices and fashions; we have no problem with that.
The Minister moved quite quickly over the requirement to ensure that the legal identity of a company operating from any premises is displayed. That is an important matter of information and disclosure, which has been a general principle of company legislation since about the 1850s. Getting rid of any of that requirement is an important step and something that we should not do lightly. I have sat in many waiting rooms, looking at
company names while waiting to have meetings, interviews and so on; a lot can be derived from such information. It is not particularly onerous for premises to display that information, even if companies are changing quickly. Will the Minister outline a little more about why she thinks the change is necessary and how she thinks improved corporate transparency can be achieved, which is something that I know that she cares about?On the sensitive words and expressions regulations, there is a long-standing principle—I do not think this is in any doubt on either side of the Committee—that a company name should not give the general public the impression that that company has a status or authority that it does not, nor should it be used in a way that misleads the public. I think that the Minister said that. As I understand it, the purpose of the changes is to simplify the process and reduce the time taken for businesses to set up, which is something that we heartily agree with. That may include time wasted on having a proposed name considered and rejected by any relevant authority. Will the Minister start naming and shaming? Can she tell the Committee how many times a company has had a proposed name rejected, and will she highlight any particularly bad offenders from the public sector? How does her Department fare when it comes to providing approval, and how does that match with other Departments or agencies?
The Minister mentioned some of the words that have been considered and will not be included on the sensitive words list. I am surprised that some of them have been excluded—two in particular. The first is “abortion”. That word is incredibly sensitive and, in some cases, can raise issues of violence and intimidation. I would have thought that an additional degree of scrutiny and approval might still be necessary when it comes to companies using the word “abortion”. Will the Minister explain why it was taken off the list?
In a separate but similar way, I am surprised at the possible exclusion of the term “data protection”, given the threats and risks to the data security of people and companies these days. I will use an extreme example from the terms that will be excluded. Once the regulations have been passed, I could set up a company called the United Kingdom Data Protection Authority. That sounds like a corporate entity with a status that simply is not warranted. There is a risk that members of the public or companies will pass on money or personal information to the United Kingdom Data Protection Authority, which I could then exploit for my personal gain. What measures are in place to prevent that from occurring, given that the Minister plans to remove those words from the sensitive list?
Stephen Doughty: My hon. Friend makes an extremely important point. He and Members from both sides of the House will be aware of companies that have posed as official UK Government agencies and offered services at a premium that are available for free or at a much reduced cost. We have questioned the Government about that problem a number of times. Does my hon. Friend agree that that is a particular problem, and that the change will create an additional worry because it may enable companies to mislead the public?
Mr Wright: I certainly agree. The whole House is united in thinking that no company name should mislead or give a status of pre-eminence that the entity does not have and would enable it defraud the public. Does the Minister think that those words should be excluded, given the growing problem of data security?
The right hon. Member for Uxbridge and South Ruislip made an important point. To be fair to the Government, the arbitrary nature of the sensitive words on the list is not an issue of their making. It is a perennial issue that has come up time and again for the past 30 years. It has been raised many times. An old favourite is, “Why are the words ‘polytechnic’ and ‘university’ on the list, but ‘college’ is not?” Surely a company offering educational services and calling itself Shakespeare College Oxford or Hawking College Cambridge is trying to gain an unwarranted level of status that will mislead the public.
I am pleased that Sheffield was mentioned and that it is on the list. It is known throughout the world as a great steel-making city. “Made in Sheffield” is a global mark of quality. I only wish that the Government were more active in helping the UK steel industry, which would also help Sheffield steel. But why not Axminster, Whitby cod, Hartlepool cod or Wensleydale? Will the Minister consider looking at the issue in a back-to-basics manner and altering the arbitrary nature of the sensitive words list? I know that words change and language evolves, but we can look at this issue more systematically.
Oliver Colvile (Plymouth, Sutton and Devonport) (Con): It is a delightful pleasure to serve under your chairmanship, Mr Chope. May I suggest that Plymouth gin should be added to the list?
Mr Wright: Given that I am doing dry January, that is tempting. I would consider talking to the hon. Gentleman about that on 1 February.
The Minister said that approval must be sought from the Secretary of State and various other agencies. I was particularly struck by the fact that the Secretary of State’s approval and the Financial Conduct Authority’s views must be sought for the use of the word “bank” in a name. As an illustration—I am genuinely not trying to make a political point—will that apply when a food bank is set up? That would be ridiculous, overtly bureaucratic and burdensome. Food banks are, alas, required in far too many parts of the country in deprived areas such as mine—a food bank was set up in the past couple of years in Hartlepool. If I were to set up the second Hartlepool food bank company, would I really require the approval of the Secretary of State and the views of the FCA? That seems not to comply with common sense, and I would be interested to hear the Minister’s views on that.
Sir John Randall: Perhaps I can help the hon. Gentleman. I would suggest that “foodbank” is one word.
Mr Wright: Not necessarily—and I checked this morning, because I thought I might be asked that. In some places it is one word, but in others, such as Streatham food bank—I may be wrong—I think it is two words. On that basis, the change is not common sense and is overtly bureaucratic.
Finally, when the register of business names was abolished some 30 years ago, a requirement, which we have been talking about, was introduced for the Secretary of State to give prior approval for certain names. However, there is no requirement for prior approval for a business name that is the trader’s or the partner’s name. Are those two things not contradictory, and is that something that the Committee needs to think about? For example, what would the position be of a Mr and Mrs Duke or a Mr and Mrs Windsor? Let us take Mr and Mrs Duke, perhaps from Cornwall, Edinburgh or Northumberland. Are they able to set up a business using their surname? Would they require prior approval? That, again, seems very onerous. I presume that they would, but will the Minister clarify and confirm that?
On that basis, the regulations are sensible and pro-business, and we support them. However, I hope the Minister will address the points that I have raised.
4.50 pm
Jo Swinson: I thank the hon. Gentleman for the constructive way in which he has approached these issues and I welcome his support for the regulations. Generally, I like to wish all people making new year’s resolutions well in their efforts, but sadly I do not feel that I can quite be tempted to do so on this occasion. Perhaps if he has made other resolutions, I might be able to offer support for those.
He referred to the display of names within a particular location that may have many different companies registered at it, and I recognise the point that he is making. This information needs to be available, but, as he rightly says, this is something that dates back to the 1850s. Of course, the way in which we consumed information then was quite different. If someone wanted to find out about a company, they would have been much more likely to go along to a particular premises and see the company’s name there. These days, most people will probably find the company name on the internet. That information is much more freely available than it was 150 years ago. Because of progress in technology and so on, it is probably the case that in many more instances companies are registered at one location. The impracticality of that is therefore greater than it would have been a long time ago.
The regulations are about recognising not that these names should not be displayed, because it is useful that that information is still there, but that the prescriptive way in which that was outlined in legislation was not appropriate. The key thing is that these names should still be available at any location. We just want to remove the prescriptive nature of that.
If the hon. Gentleman will permit me, I will write to him on the specific issue of the exact number of names that were refused in the last year. He asked me to name and shame particular parts of the public sector. While I will happily get the information about the numbers that were refused, and in particular whether there were any common words that were applied for and refused, it would not always be the case that that is a matter for shame. There are sometimes very good reasons why words might not be allowed when a company name is set up, and that is the purpose of having these sensitive names. There may be some names that are frequently applied for that would be misleading to the public and,
in those circumstances, it is quite right for the public sector and for Companies House, after consultation with relevant bodies, to say “No, you cannot have this company name.”Mr Wright: I appreciate the Minister’s courtesy in writing to me with that information. Can I confirm one other thing? I want not only the numbers, but the timing. For example, if her Department takes six months to go through the process, that is not pro-business and efficient, so can she also provide the timings?
Jo Swinson: I will happily endeavour to get that information.
The hon. Gentleman raised the sensitive issue of abortion. Many hon. Members will share his concern, and I also wanted to be reassured that this change was not going to cause problems. The Department of Health, which played a leading role in this issue because it currently has to approve any use of that particular name, is not concerned by the change. What is really important is that anybody providing and performing abortion procedures still needs to be licensed, which is already covered under the Abortion Act 1967, so the protections for people, in terms of the service that is actually provided, remain. The Department of Health, as the lead Department that polices this issue, does not therefore feel that this particular element of the sensitive name needs to be retained.
The hon. Gentleman also raises the issue of data protection. It is worth bearing in mind that any name suggesting a connection with government, whether it be the UK Government, devolved Administrations, local authorities or public authorities, still needs to be approved by the Secretary of State. “Data protection” per se will no longer be on the sensitive list, but if “data protection” were used in the context of a name such as he suggested—UK Data Protection Authority suggests that the company is an official Government body—it would still be looked at by Companies House. The words might be used in an entirely different context, such as if someone set up a company to provide data protection advice or registration services, and so on, that is clearly commercial in nature, so the use of those words would not necessarily have to be approved. It is about whether the company is trying to pass itself off as a Government authority or, indeed, whether it is addressing a clearly commercial data protection issue, whereby the company’s name would not need to be approved.
On food banks, although the word “bank” needs to be approved, for a clearly innocuous use—this comes back to the issue about timings—there would be minimal checks and a swift approval process. The process therefore does not need to be particularly bureaucratic, and such an application would not be held up. The same would apply to Mr and Mrs Duke, which was the hon. Gentleman’s example of a surname. The company name would still need to be approved as a sensitive word, but clearly, if the name is somebody’s surname and is therefore used in an appropriate context, it would be very likely to be approved straightforwardly without additional fuss. I do not think there is a way around the conundrum he suggests. Certain words must have a degree of scrutiny but, equally, people might have a very straightforward
reason for wanting to use them in a company name. Ensuring that the process is as efficient as possible is therefore key.Stephen Doughty: I have a Windsor road in Penarth in my constituency, and there are many local shops in Windsor arcade. Were those shops to use “Windsor” in their name, I assume it would be subject to such a speedy checking process because they would have a reason for using that word.
Jo Swinson: Indeed. In fact, there may be businesses that have already done so. Of course, there will certainly be many businesses in Windsor and Sheffield that have appropriately used “Windsor” in their name and gone through that process. Speed and efficiency are clearly important. By reducing the number of words only to those that are absolutely necessary, the number of applications will be reduced by more than 25,000, thereby freeing Companies House to focus on the truly sensitive names.
The Committee has suggested various other places and names that should be added to the list, such as Plymouth and Axminster, but it is important to recognise
that we are trying to deregulate. We consulted on whether the list of words is appropriate. A case could have been made if there was any very pressing, evidence-based need for additions to the list, but the case was not made strongly. Of course, other legislation, particularly European legislation, covers Cheddar and Melton Mowbray pork pies, for example.With that response, and with my assurance that I will write with further details on particular issues, I hope the Committee will be happy to agree to the regulations.
That the Committee has considered the Company, Limited Liability Partnership and Business Names (Sensitive Words and Expressions) Regulations 2014 (S.I. 2014, No. 3140).
Draft Company, Limited Liability Partnership and Business (Names and Trading Disclosures) Regulations 2014
That the Committee has considered the draft Company, Limited Liability Partnership and Business (Names and Trading Disclosures) Regulations 2014.—( Jo Swinson.)